Senior Trader Daily Update 6 September 2017

Good morning everyone.
 
Some fairly brutal price action was seen on Tuesday, particularly during the offshore time zones of Europe and the US, with gold slammed lower USD 13.00 and AUD 22.00 as profit taking / long liquidation shook out some of the weaker long positions and late-to-the-party speculative longs. As noted yesterday however, given the present geopolitical climate, dips would likely be well supported as investors who missed the initial move higher were given the opportunity to “get on board”. Thus it was that gold was able to erase all of its losses on the day and surge to its highest level in USD terms since September 22nd last year by the close of trading in New York.
 
There is little further to add at present. While prudence dictates keeping watch on US domestic politics and economic developments, investor focus remains firmly on geopolitical news especially in relation to North Korea. Investor nervousness will continue to drive the ‘safe haven bid’ that presently underpins precious metals values, notwithstanding the significant build-up in net speculative long positioning which leaves open the spectre of reasonable corrective price action.
 
Technically, XAU/AUD has advanced beyond favoured targets at the 1660/1665 area on the back of the most recent developments. Should gold clear resistance at AUD 1686.50 (the 76.4% Fibonacci retracement of the 1728 to 1552.50 move) however, then a move to the June 6th high at AUD 1728.00 which would complete a technical “rounding bottom” pattern (see chart), is highly probable.
     
XAU/USD since breaking out from its sideways trading band and beyond the technically important USD 1300.00 in early August, yesterday managed to advance to its highest level since late September last year. The region between the 22/09/16 high at USD 1344.00 as well as the psychological USD 1350 level (and option strike) presents as the nearest upside target / resistance zone and (all things being equal) it is likely there will be significant ‘wood to be chopped’ in that area which may slow down the recent advance.
 
Good luck.
 
Regards,
Andre