Gold Recovers As Sterling Tumbles

Yesterday’s (Tuesday) fall in gold continued until good support at $950 launched a bounce back above $970. Equities clung on for a second day, but Sterling took a beating.

Any Doctor Who fans remember the weeping angels? They were statues but every time you blinked, they’d move. Hmm, well Sterling was my weeping angel today. I was a bit too focused on gold this morning and thought I was keeping an eye on a dull GBP/USD price until it registered that a big figure was different. The price wasn’t a few pips down from $1.4480; it had fallen over 100 pips to $1.4366.

Technical analysis is based on patterns repeating themselves and this pattern repeated in US time. One minute the price was $1.4380; the next time I glanced up it was another 100 pips lower at $1.4286. What the hell’s going on?

Yep, I read all the stuff about the Ukraine following Latvia to junk status, and the rating agencies expecting more sovereign downgrades, but I don’t see why Sterling should shoulder the blame for that lot. The Euro’s been dragged down to some extent, but is still up at £0.89 against the Pound. Huh!

This morning I rushed out a piece on gold (Will Gold Keep Its Shine?); this was a classic case of markets moving too quickly (and me too slowly). I had the idea when gold was getting frothy last week, started writing when it was around $990 and published when it was a sniff away from my first target of $950.

The argument in the article was that a setback was needed before a further push through the $1000 level. I still think there’s a good chance we see a drop lower in March, but for today I was happy to close my shorts when the $950 level held firm. I closed out at $955 and $960 and later bought a £1 long bet at $965. This is now protected at break-even while I wait for the next move.
I briefly traded GBP/JPY today; I was stopped out at a fraction above break-even as the move died. I’d been half-following the chart for days and made a note to get excited if the price rose above Y141.55. This was a break above January’s high and ought to put it on course for a test of Y150.

I wasn’t sucked in to a long trade at that level-the Yen had been badly beaten up in the past few days and looked set for a partial recovery. But I kept an eye on the rate and joined an attempted bounce, buying £1 at Y139.27. That seemed a fair set-back from this morning’s levels and when the price moved quickly up to Y139.50 I brought my stop up to Y139.28 and sat back to enjoy the rally.

Rally? I obviously hadn’t been paying attention to Sterling’s woes. The move swiftly petered out and reversed through my stop and down into the Y138s. But in pure Robert the Bruce style I’m looking to have another crack at this one, once Sterling has sorted itself out.

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