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Gold will continue to be headline driven

Gold prices were weaker in trade on Tuesday as stronger stocks took some of the wind out of the yellow metals' sails. Despite all that is currently going on in the geopolitical landscape, it appears that risk appetite still remains relatively high, and this will likely work against gold and precious metals. There has been a lot of talk recently about a potential top in the stock market, but the equities markets have shown that they are not going to go quietly. In addition to a stronger stock market, gold had to contend with a stronger dollar index as well.

It is worth noting that gold did close well of the session's lows. It would seem important at this point for the gold bulls to be able to hold the psychologically important $1300 level. Should the bulls fail to hold the line in the sand here, it could pave the way for additional selling pressure in the yellow metal as stops are run and more speculators hit the exits. One has to also wonder about gold's inability to thus far move significantly higher given the current geopolitical tensions. Gold has appeared comfortable in its current trading range, however it also appears that the market may be coiling up for a sharp directional move. The direction has yet to be determined.

Gold will likely continue to be headline driven for the foreseeable future, and may also take cues from the equities markets as well as the greenback. Gold investors will likely watch the current divergence between small caps and larger equities for signs of a market top, and may reallocate funds to gold should the stock market begin to show more signs of turning lower.

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23 Jul 2014 | Categories: Gold

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