Does Geopolitical Risk Require a Shift in Thinking on Gold? | Vantage FX

Does Geopolitical Risk Require a Shift in Thinking on Gold?

April 27, 2017

Up until recently, we had been speaking about shorting gold on the blog. Price was sitting at a major higher time frame resistance level and the opportunity was there to manage our risk around it.

But then the US launched missiles into Syria, tensions on the Korean peninsula escalated and most recently, the French elections all threw a metaphorical spanner in the works.

So does this shift in the geopolitical landscape to a more risk off environment mean that gold becomes a buy?

XAU/USD Daily:
160427_xauusd_daily
Click on chart to see a larger view.

Taking a look at the daily chart, you can see that price has broken above the higher time frame resistance level that we were looking to use as a risk management level for potential shorts.

With this level now gone, should our thinking change with it? If you’re in the ‘trade a level until it’s broken’ camp, then the answer would be yes.

XAU/USD Hourly:
160427_xauusd_hourly
Click on chart to see a larger view.

Zooming in to the hourly chart, you can see that after breaking above the higher time frame resistance level, price has now pulled back to retest it this time as support.

This could be viewed as confirmation that the level has in fact held as support and now you would look to buy any short term pullbacks. One such pullback that I’ve marked in green on the hourly chart above.

Let us know what you’re thinking and make sure you’re able to take advantage of market opportunity trading gold on MT4 with Vantage FX.

Dane Williams – @VantageFX

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