The last couple of weeks saw us suggest that a rally in the gold price, up to $1280, might be attainable from its sluggish $1240 level. This call has ultimately come to pass; however, it was felt that the technical picture would be the driving force, as the precious metal looked oversold at the beginning of June. Subsequent events in the last four days have seen $1280 reached, but the gold bugs were unable to hold on to that region.
A glance at the chart shows that intraday action breaking through the 200-day moving average and flirting with the 50-DMA, has been a step too far.
What will be particularly troubling is that we have seen an escalation in Ukraine, as Russia has now turned off the supply of energy to the country, coupled with the situation in Iraq taking a very worrying turn.
The US has announced that it will be sending some 300 fully-armed troops to the country predominantly to protect the US embassy staff and US citizens. How quickly could this escalate? An almost unanswerable question, but the sort that should see gold become more popular than it currently is.