Gold Prices Fall As US Dollar Gains Amid Market Turmoil

Gold prices fell as haven demand buoyed the US Dollar, applying familiar downward pressure to the standby anti-fiat alternative. The MSCI World benchmark stock index fell for a second day, shedding 0.3 percent amid worries about stress in emerging market assets and the escalating trade war between the US and China.

Sentiment-sensitive crude oil prices likewise tracked lower. Headwinds from broad-based risk aversion were compounded by de-facto pressure from the greenback’s advance since prices are denominated in terms of the leading reserve currency on global financial markets.

THIN LIQUIDITY MAY AMPLIFY KNEEJERK VOLATILITY

From here, market closures in the US and Canada for the Labor Day holiday are likely to sap liquidity and may undermine immediate follow-through. Still, diminished participation may amplify kneejerk volatility if a particularly eye-catching headline hits the wires. Traders would be wise to proceed with caution.

GOLD TECHNICAL ANALYSIS

Gold prices are probing below counter-trend support set from mid-August lows, with a sustained break exposing initially exposing the August 24 low at 1183.28. A further push below that targets the swing low at 1160.37. Alternatively, a rise back abovethe August 28 high at 1214.30 opens the door for a retest of the 1235.24-41.64 area (Dec’17 support, 38.2% Fibonacci retracement).

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices’ upward momentum has slowed a bit along the way toward resistance marked by the 38.2%Fibonacci expansion at 70.99. A turn lower from here that take prices below the 23.6% level at 68.49 targets rising trend support in the 65.08-66.91 area. Alternatively, a push above resistance exposes the next upside barrier in the 72.88-73.02 area (May 22 high, 50% Fib).