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Gold is trading at $1286, up 0.2%, as short-covering and bargain hunting has helped the metal edge higher. Gold has remained under the $1300 mark for the past three trading sessions and since the financial markets do not move in straight lines, it is not surprising that we are in positive territory today.
Equity markets finished higher yesterday, largely driven by the merger and acquisition speculation in the pharmaceutical sector. Today traders are moving their cash out of equities and into gold.
As I mentioned previously, gold tends to benefit if there is uncertainty in the equity markets. There has been no progression in Ukraine over the past few days, as pro-Russian militants and Ukrainian forces continue their standoff.
Gold is below the 200-, 100- and 50-hour moving averages, which is a bearish indicator. If the corporate reporting season drives equity markets higher, we could see it return to the recent low of $1276. However, if the situation deteriorates in Ukraine, the yellow metal may retest the $1300 mark.