After breaking news about the Swiss National Bank (SNB) dropping the Swiss franc’s position in the Euro currency, safe-haven demand has been high amongst investors. Gold bulls are gaining near-term upside technical momentum, which has boosted chart-based buying. Gold futures have also made a solid push, and hit a four-and-a-half month high. February Comex was up $28.20 at $1,262.50 an ounce, while spot gold was up $33.30 at $1,263.00.
Waves were made in the currency, financial, and stock markets with the surprising SNB news. In 2011, the SNB implemented a peg in an attempt to stem the appreciation of the franc. But recently, the franc has rallied against the Euro by roughly 20 percent, and the SNB news has made the market place even more anxious.
The European Central Bank has been considering quantitative easing of its monetary policy, and could be playing a role in the Swiss Central Bank move. And while gold prices have been on the rise for the U.S. Treasury, the European court decided on Wednesday that the ECB could install quantitative easing moves in its monetary policy. ECB meetings on monetary policy will take place on January 22.
The U.S. Federal Reserve may hold off a hike in interest rates after underlying bullish factors for gold and other precious metals begin to take hold. The hold in interest hikes could potentially be postponed till 2016. Drops in crude oil prices and deflation concerns headline the worries preventing the Fed from their rate hikes.
Gold bulls have the overall near-term technical advantage and have gained upside momentum after prices hit the four-and-a-half month high. Bears’ next near-term downside price breakout objective is closing prices below solid technical support at this week’s low of $1,217.50. First resistance is seen at today’s high of $1,267.20 and then at $1,275.00. First support is seen at $1,250.00 and then at $1,244.50.
