Gold & Silver

Gold eases from six-year high with focus on Tehran’s next move

Bloomberg Singapore | Updated on January 07, 2020 Published on January 07, 2020

Gold fell from the highest level in more than six years as some appetite for risk crept back into financial markets that had been rattled by the sharp escalation of tensions between the US and Iran.

Prices of the traditional haven -- which rallied 2.4% over the past two days to approach $1,600 an ounce -- eased on Tuesday as Asian equities rebounded. The shift came even as Washington committed more troops to the Mideast amid expectations that Tehran will retaliate for the US killing of a senior general.

“Relief can be seen across markets following the knee-jerk reaction toward the eruption of geopolitical tensions,” Jingyi Pan, market strategist at IG Asia Pte in Singapore, said in a note. Still, while bullion has given up some lustre, it’s keeping its position as a favoured hedge in the face of elevated risks, she said.

There are mixed signals on gold’s path from here. Implied volatility on options -- or the likelihood prices will continue the bullish move -- jumped to the highest since mid-October, according to a measure calculated by the Chicago Board Options Exchange. However, the metal’s 14-day relative strength index remains above 70, suggesting it’s still overbought.

Investors are also focused on the monthly US jobs report due on Friday, which could offer some clues on the economy and the Federal Reserve’s monetary policy path into 2020. On the trade front, China is planning to sign the first phase of its deal with the US in Washington on January 15, according to people familiar with the matter.

Published on January 07, 2020
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