The market route continues and February trade looks bleak on its face- So is smart money moving into gold?
Stocks are trading heavy at the open of February trade as US Treasuries continued to move lower. So with markets in a seemingly "risk off" mode, where does that leave gold? One would think that investors will flock into 'haven' assets, but that trade doesn't seem all that convincing today.
Despite the ongoing turmoil in broader risk assets, gold advances have been limited and prices continued to hold below the late January highs near $1270 where channel resistance now rests with the 100-day moving average. Stochastic crossover and divergence in price suggests that this rally may be at risk here and all eyes now turn to the Non-farm payrolls report at the end of the week for guidance.
Today's miss on US ISM manufacturing has only compounded speculation that the Fed may look to Taper the Taper, which would be seen as bullish for the gold bugs. If the jobs report on Friday comes out weaker than expected, look for buyers to come in. If prices are able to close the week above $1270, expect further support to follow with sellers expected at $1314 and $1361 before testing the recent range highs at $1433.
Let's not jump the gun though- looking at the daily chart, gold still remains in a falling channel and until it breaks out, prices are vulnerable. The fact that gold couldn't really push higher today may be a 'tell' that the positioning here still remains light and if we break last week's low, we're likely to see more losses heading into February.