All trading involves risk. Losses can exceed deposits.

Gold continues to trade sideways

Over the last three weeks gold has started to see its low levels move higher.

All trading involves risk. Losses can exceed deposits.

In the last three trading days gold continued to move sideways, but at the same time broke through the 20-day moving average. This pattern will have many of the gold bulls hoping for a break-up in the imminent future.

Once again Asian markets were weak last night, and USD/JPY continues to fall, now down to Y96.11. This should trigger more weakness in the US dollar and therefore help ease gold and other commodities higher.

Yesterday’s comments from ECB president Mario Draghi do not appear to have done much to convince equity traders that the EU is set to improve its economic outlook in the short term, and as such has reduced the chances of negative pressure on gold. However, markets will be willing to give the EU some leeway as far as time is concerned, if it means they will introduce a stimulus package to get things moving.

All of this adds up to a period of stagnation instead of gold making real progress back towards its 2011 highs. In order to see traders move back into this sector we would need to see some negative news taken seriously, followed by a flight-to-safety mentality.

Spot Gold (DFB) chart

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.