Gold Prices Sharply Rallied Ahead Of The British Prime Minister Theresa May’s Speech.
Gold prices edged higher on Monday’s session, marking its strongest level in two months as investors are closely watching on the most anticipated speech by British Prime Minister Theresa May and the inauguration of the U.S. President-elect Donald Trump later this week.
Gold for February delivery on the Comex division of the New York Mercantile Exchange hit the highest level of $1,208.70 a troy ounce, marking a level not seen since November 23.
Meanwhile, it last stood at $1,202.95, up by around $7.00, or 0.6%.
The British pound slipped more than 1% against the dollar to a fresh three-month low after reports on Prime Minister Theresa May’s plans on a “clean and hard” exit from the European Union (EU) on Tuesday.
Based on the reports, May was willing to quit the EU’s single market to redeem control of Britain’s borders.
May also said that the formal withdrawal from the EU will take effect by the end of March, and that Article 50 will be triggered as well. So far, the British Prime Minister has given a few details about what kind of deal she will be seeking.
In essence, the global financial markets will likely continue to eye on U.S. President-elect Donald Trump’s Oath of Office, including his scheduled inaugural speech on Friday.
Investors will also closely watch on any detail he may give on his pledges of tax reform, infrastructure spending and deregulation, including insights over the China’s policies and the domestic economy.
Safe-Haven Demand
Ahead of the surging gold prices on Monday, boosted by safe-haven demand due to growing uncertainties over US policy, spot gold rallied 0.5 percent and stood at $1,203.10 per ounce, while US gold futures added 0.6 percent at $1,203.60 per ounce.
"Buying shows that people are looking ahead this week with Trump's inauguration and discussions on Brexit. There is a lot of uncertainty moving forward," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.
Gold for this month has been included on the investors’ watch list as questions over Federal Reserve policy and the Trump administration have been fueling a better-than-expected January bounce in a beaten-down market.
Subsequently, hedge funds and money managers in the week to Jan. 10 upgraded their net long position in COMEX gold contracts for the first time since nine weeks, according to the US Commodity Futures Trading Commission (CFTC) data on Friday.
The chart below illustrates the price movement of gold, which clearly indicates a bullish tone on the commodity. Gold posted six consecutive gains in a light trading volume at 1.20832 in late trade.
It positioned slightly away from its support level and is expected to further rally, with its RSI suggesting a value of 66.4788.
Conclusion
Given a confirmation of a trend, market participants are recommended to open Buy positions as the RSI doesn’t indicate an overbought level. Gold is expected to further rally as it is clearly shown that it is slightly away from its support level.
Additionally, investors will closely watch on British Prime Minister Theresa May plans “hard Brexit” plans, citing it would give a huge impact on the commodity.