Gold Price up on Safe-Haven Demand amid Anxious Marketplace
The comments below are an edited and abridged synopsis of an article by Jim Wyckoff
Gold is moderately higher on safe-haven buying in a nervous marketplace as a usually tumultuous month of October begins for stock and financial markets. Traders and investors are keeping a close eye on the currency markets.
The US dollar index is higher. The strong dollar is putting pressure on other currencies, which is worrisome to those who have endured currency crises. The main concern is general marketplace contagion if secondary currency dislocations and illiquidity spill over into lack of confidence in the global financial transactions system. Major economies have taken steps to prevent another global financial market crisis, but when everyone runs for the exits at once, even robust systems can be overrun. Any investment bank or hedge fund that appears to be in trouble may provide the first clue of a much bigger problem developing. Such a scenario would likely prompt a bigger move into the hard assets of safe-haven gold and silver.
The marketplace was assuaged somewhat when the Bank of England announced that it will begin purchasing UK government bonds in order to stabilize the rattled UK bond market. The IMF said the UK government should re-examine its stated plan to stimulate its economy through massive borrowing and bond sales.
Bulls’ next upside price objective is to produce a close above solid resistance at $1,687 (at the time of writing, gold is $1,706). Bears’ next near-term downside price objective is pushing futures prices below solid technical support at $1,600.
Silver bulls’ next upside price objective is closing prices above solid technical resistance at $19.50 (at the time of writing, silver is $20.14). The next downside price objective for the bears is closing prices below solid support at the September low of $17.40. First resistance is seen at $18.50 and then at $19.00. Next support is seen at the overnight low of $17.895 and then at $17.40.