Gold futures, more specifically COMEX contracts, surged at the end of last week as the US customs agency is said to have marked the precious metal as being subject to tariffs. The spot market was much calmer as noted here, as traders were also waiting for the White House to make a mention about it.
But as we get into the new week, there’s still no clarity on the matter. So, it’s still a bit of a limbo situation. When it comes to tariffs, Trump has the final say. And if we don’t hear anything, it’s hard to take other sources as confirmation really.
For now, traders are still assessing the situation. But even if the tariffs are confirmed, it really comes down to what the intention from the US really is as mentioned in the linked post.
Going back to gold prices today, we are seeing COMEX futures fall back from the surge higher on Friday. The spread between COMEX futures and LME futures have narrowed back to around $60, roughly similar to back before the jump. For some context, the spike higher on Friday saw the spread hit over $120 at the peak.
And as the situation cools, so are gold prices at the spot level.
The near-term chart shows buyers have lost the more bullish bias, with price action dipping back below the 100-hour moving average (red line). The 1% drop today now puts the focus back on the 200-hour moving average (blue line) at around $3,352 currently. Hold that line and the near-term bias stays more neutral with buyers keeping some relevance. But break below that, and the near-term bias switches back to being more bearish in favouring sellers.
While we continue to wait on the White House to say something, if they ever do, the big picture still shows gold largely consolidating since May. And we’re yet to really break that stride over the last few months. So, the next significant move will come on a break of this consolidative phase for the most part.
To the upside, gold will have to first contest the May, June, and July highs around $3,435-50 before thinking about another shot at the $3,500 mark. As for the downside, the 100-day moving average (red line) at $3,292 currently is a big, big one to watch. Gold has not firmly broken that mark since October 2023. So, if we do get a notable correction, that might be the key trigger for one.
This article was written by Justin Low at investinglive.com.