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Gold Sways From $1,300 as Russian-Ukraine Tensions “Ease”; FOMC In View

by on April 29, 2014 12:34 pm BST
 

Gold pulls back from $1,300 per ounce as the Russian-Ukraine tensions “ease” after it is reported that Russian President Vladimir Putin is stepping up to the table in order to converse about the current situation. This is coming after fresh sanctions are placed on additional Russian officials and corporations. The sanctions still are viewed as futile.”For now, risk trade is back on. Gold is under pressure once again as the rewards are bigger for traders to invest that money in the equity markets, rather than keep shining the yellow metal,” according to Naeem Aslam, chief market analyst at Ava Capital Markets Ltd. in Dublin.

The precious metal has swayed back-and-forth over $1,300 as new headlines hit the air, which makes gold price action sporadic. “You’re going to get a lot of backwards and forwards in gold,” said Adrian Day, president of Adrian Day Asset Management. Day is bullish over the longer-term, but admits that it is only a trade for the most patient traders.

Traders will be looking towards tomorrow’s FOMC statement from the Federal Reserve. “Expectations are that QE reduction will continue and as such, the upside will probably be limited for the precious complex,” said David Govett, head of precious metals at Marex Spectron Group. The lack of geopolitical news will keep gold range bound, while gold is still up over seven percent year-to-date.

The weekly gold futures chart is looking ever bearish after the devastating decline from $1,392.6 per ounce following the initial kickoff to the Russian-Ukraine tensions. Price action declined as traders deemed there was no reason for the safe-haven asset to pressing $1,400.

Momentum has been sucked out of gold, leaving it range bound after the ADX fell from 39 to 22. There has been a negative convergence of +/- DMI, but it is not decisive.

Gold is, however, pressuring key FIbonacci level 61.8 percent at $1,281.6 – a mere $10 away. Traders could expect this level to hold, but tomorrow could prove detrimental for price action depending on what the Fed has in store. Some economists believe the Fed could implement policy tightening sooner than later, while the expected $10 billion taper may not move the needle too much.

A breakdown at current levels would leave support level $1,231 open for the taking. This would be the last significant support before an attempt to take out mutli-year lows at $1,179.4. Near-term resistance levels can be found at $1,306 and $1,327.

1WK Chart of GC

1WK Chart of GC