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Gold needs a driver

Olymp Trade

During the past 2 weeks, gold has been consolidating in the zone of $ 1285-1295 per ounce. In other words, the asset returned to prices seen in May 2018. The trend that returned quotes to this price starts from the beginning of October. It is believed that the longer the consolidation before the level, the greater the chance of its breakout. When will it happen?

Seasonal factors such as the wedding season in India or macroeconomic risk factors such as the US and China trade war, are already priced in the market. Moreover, these factors have more of an impact than the increase in the interest rate of the US Federal Reserve. Nevertheless, they are already priced in.
In order to break through the current level of resistance in gold, a new driver is needed. For Gold, as a safe haven, geopolitical risks can become this driver. We are talking about the following two moments of uncertainty:

- Solving the Brexit issue. Voting on Tuesday failed, the next vote of no confidence in the government was held on Wednesday. An interesting point is that neither gold nor pound (with the exception of a short term breakout) really did respond to this. Are solutions still to come? There are only 10 weeks left before the official exit from the EU.

- The work of the US government has been suspended for almost a month. And there are no signs of change on this issue. The duration of the government shutdown is a new record, but who knows how long it will last?

However, these political problems may be resolved in the near future; we can expect the beginning of new movements in gold. That is why these situations in the market represent excellent opportunities for arbitration.

Olymp Trade Review

Source: https://olymptrade.com/
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