Gold Bulls Eye $1500

Fiona Cincotta
By :  ,  Market Analyst
Gold is on the rise again benefiting from its safe haven status as traders fret over the health of the global economy, amid spiraling trade tensions.  

 A trio of central banks across Asia Pacific delivered surprise interest rate decisions overnight. Both New Zealand and India cut rates deeper than forecast whilst Thailand’s rate cut was almost completely unexpected. We are seeing policy makers act more aggressively than the market was counting on, in a bid to bolster their economies.  

As the US – Sino trade war continues to escalate, central banks are growing increasingly concerned over the impact on their economies and more broadly, the global economy. With PBOC once again allowing its currency to set close to the key 7/dollar level, China continues to demonstrate it means business. There are no signs of US – Sino tensions easing anytime soon.

If traders needed further evidence of the slowing global economy, they only needed to look towards German industrial production figures. As if on cue and adding to traders’ woes, data from Germany showed that industrial production dropped -1.5% month on month in June, significantly worse than the -0.5% decline forecast. 
A trio of banks cutting in addition to warning signs flashing from the German economy has left investors jittery and in search of safe havens once again.

Gold continues to rally for a third straight session, jumping to fresh multi-year highs of $1491 in early trade.  Bulls are focusing their attention on the psychological level of $1500. However, we could see the rally pause for breath now as traders look to book profits amid extremely overbought conditions. Attention will turn to Chicago Fed President Evans this afternoon for short term trading opportunities.

Related tags: Gold China Central Bank

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