Market fears push gold higher

Only time will tell if today’s stroll to safety turns into a run later in the week.

The closer we get to the debt ceiling being broken the higher the level of fear, and as equities drift lower gold finds itself edging higher.

A true catalyst to get gold back onto a bullish track has been absent for over a year, as even the troubles in Syria weren’t enough to change sentiment. When gold hit its all-time high, above $1900 in 2011, it was due to the US government’s inability to agree the debt ceiling and the panic that ensued; it will be interesting to see if repeated panic in this area inspires similar behaviour.

In the past few years, however, traders have become increasingly blasé towards negative news, and the knock-on effects on save haven commodities have become increasingly diminished. Trading gold has always been an emotive proposition, with buyers of the precious metal historically tending to lean towards long-term holdings.

The inability of gold to charge higher does go some way to highlighting how heavily saturated the market has become with ‘paper’ ETF gold, and it will take a battle from the bulls to see any hope of gold retesting previous highs.

Technical traders will be closely watching the $1325 level as a break above this could well trigger further buyers.  

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.

Find articles by analysts

This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.