Gold remains supported as yields and stocks struggle

Thanks to a pullback in bond yields and an equity market sell-off, yesterday saw gold climbed to its best level since July to reach a critical resistance level around $1238-40. The metal is now up for the fourth consecutive week as a result of investors moving out of equities and into the relative safety of government debt. In the event yields were to fall further then gold could potentially rise even more.

However, the longer-term outlook for the metal remains murky at best, as major central banks continue to tighten their belts. The US dollar remains among the strongest of currencies out there and with the Dollar Index trending higher, this could be an additional factor weighing on buck-denominated gold prices.

But for the time being, the bulls are in control and will remain so unless gold breaks back below the most recent low at $1183. Monday’s low around $1220 is meanwhile a short-term pivotal level that the bulls need defend, else the metal could go back to $1205 support before it decides on its next move. 

If the bullish trend remains intact and the metal goes on to break through that $1238-40 resistance, then in this case we could see a continuation towards the 200-day moving average at $1262 next. 

Risk Warning NoticeForeign Exchange and CFD trading are high risk and not suitable for everyone.You should carefully consider your investment objectives, level of experience and risk appetite before making a decision to trade with us.Most importantly, do not invest money you cannot afford to lose.There is considerable exposure to risk in any off-exchange transaction, including, but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of the markets that you are trading.Margin and leverageTo open a leveraged CFD or forex trade you will need to deposit money with us as margin.Margin is typically a relatively small proportion of the overall contract value.For example a contract trading on leverage of 100:1 will require margin of just 1% of the contract value.This means that a small price movement in the underlying will result in large movement in the value of your trade – this can work in your favour, or result in substantial losses.Your may lose your initial deposit and be required to deposit additional margin in order to maintain your position.If you fail to meet any margin requirement your position will be liquidated and you will be responsible for any resulting losses.