Comex Gold Sharply Higher On Technical Breakout, Safe-Haven Buying

San Francisco (Aug 6)  Gold futures are sharply higher on a technical-chart breakout Wednesday, also helped by a safe-haven bid on renewed geopolitical worries surrounding Russia and Ukraine.

As of 11:47 a.m. EDT, gold for December delivery was $21.40, or 1.7%, higher at $1,306.70 an ounce on the Comex division of the New York Mercantile Exchange. The contract traded to a high of $1,311, its most muscular level since July 29. September silver was up 19.7 cents to $20.03 an ounce.

“It has a lot to do with the (Russian) troop buildup along the Ukrainian border,” said Daniel Pavilonis, senior commodities broker with RJO Futures. “Gold started to rally on the verbiage….I think a lot of it has to do with a flight-to-safety just in case things start to escalate.”

NATO said Russia has massed some 20,000 troops on Ukraine’s border. NATO also expressed the worry that Russia could use the guise of a peace-keeping mission as an excuse to send troops into eastern Ukraine, according to news reports.

Russian President Vladimir Putin also is banning or limiting imports of agricultural products from countries that have imposed sanctions on Russia, showing he is not backing down from Western sanctions over the country’s involvement with Ukraine.

Buy stops were trigged, Pavilonis said. These are pre-placed orders activated when certain chart points are hit.

A New York desk trader characterized the sharp gain largely as a technical breakout.  A “bull pennant” formation formed over the last several weeks, he said.

“Oddly enough, the 100-day moving average and a resistance trendline are at about the same place – around $1,297-ish,” he said. Momentum accelerated on a break of this, with short covering taking place.

“I’ve seen stories saying it has something to do with Ukraine,” the trader said. “That may have been the catalyst….But I think it’s mostly technical.”

Source: KitcoNews