Time to buy gold
By Yann Quelenn
The recent outbreak of global uncertainty has rallied gold, and we think its climb will continue above the $1,300 per ounce mark. In early July the yellow metal was nearly down to $1,200, as geopolitics carried on calmly. But now things have changed.
The VIX index, which indicates how investors value market risks, has jumped towards 16 after hitting its all-time low below 10 last week. Sabre-rattling between North Korea and the USA is one reason. Behind that come concerns that: the US Federal Reserve will not deliver interest-rate hikes by year-end; the Trump Administration will not deliver its promised reforms; and, equity markets are overbought. All this has send the US dollar down, which will buoy the price of gold.
Japanese yen to keep rising on North Korean threats
By Arnaud Masset
Seeking safe haven, investors are piling into the Yen to reduce their currency risk. The risk-off move is gaining traction and has further to run. So, it would be a wise to wait out the storm before betting on a relief rally.
The JPY has been on a firmer footing since the beginning of the week, matching the rise in tensions between North Korea and the USA. The Yen surged as much as 1.70% against the USD since Monday, sending USD/JPY down to 108.91 as of Friday morning.
The pair is currently testing a key support area that lies at around 108/109 (multi lows and 50% Fibonacci on June- December 2016 rally). A break to the downside will open the road towards 106.52 as a first step (61.8% Fibo), then the key psychological support at 100. From a technical standpoint, USD/JPY already failed to break the 108.84 support twice, so there is some chance the pair will bounces back towards 110.