Marex Spectron Bullion Thoughts
A quiet week for gold, with the initial price rally on the back of North Korea tensions fading as the week wore on. We have actually only had a twenty dollar range over the last five days, with the price supported because of the geopolitical fears, but capped as no further news was forthcoming. There is also some degree of support ahead of this weekend’s French election, although buying gold on the back of a Le Pen victory is to my mind about as pointless as buying it on the back of Brexit, which was shown when in the aftermath of the latter prices came back to where they started 3 months later. I would rather sell a rally on gold in the wake of a shock result in France and concentrate on trading the euro instead. It is the currency that will suffer most from a Le Pen win. I should explain here that for those of you not familiar with the electoral procedure in France, it is highly unlikely that there will be an outright winner this weekend, but rather that the top two will go forward to a run off next month. However if one of those two is Le Pen then look for a euro sell off and a gold rally.
Other than the above there is little to discuss. Gold will continue to follow the dollar and the 10 year yields for short term moves and will obviously be influenced to a larger degree by any adverse headlines. We should stay fairly quiet today ahead of this weekend, but with US PMI out this afternoon there is scope for a quick sharp move if this is out of line in a major way. We have seen a couple of very stupid moves over the last few days, with gold dropping from 1288 to 1280 in a matter of moments on Tuesday before rallying all the way back to unchanged and higher. On Wednesday we saw another move in moments from 84 to 76 before once again rallying back to unchanged. One has to question who on earth is putting these very large orders into the market and I can only assume they haven’t heard about “best execution”. Stupid, but the way of the market nowadays.