Gold is finding some love as markets turn risk off
Correlations are starting to go all wonky once again with the dollar failing to catch a bid as the equities selloff continues in markets today. The dollar was steady to begin with but is now slumping across the board.
One of the main beneficiaries from the greenback’s decline is gold as the precious metal now rises to $1,232 and looks towards a firm break of the 100-day MA (red line).
For much of this year, risk off sentiment has seen flows into the dollar and not gold but we’re starting to see the reverse of that lately and today is the latest example of such flows. As price looks to hold a firm break above the 100-day MA, this could be the much needed turning point for bullion buyers back to the upside.
There are some resistance levels nearby from the 12 December low @ $1,236.55 and the 38.2 retracement level @ $1,238.64 but if those levels give way, the recovery in gold has more legs to go especially if the dollar has started to lose its appeal from haven bids – which promotes flows into gold instead.