Yellow metal needs constant observation

AFTER a meteoric rise in gold prices, in the recent weeks, the attention of the market has largely moved mainly into silver, gold's laggard cousin, as well as the Japanese yen. This move into alternative safe-haven vehicles by the market was largely fuelled by the high gold prices, which did not present itself as an attractive opportunity for investors and retail traders. However, it is of our view that we should not be turning our backs on the yellow precious metal any time soon.

From a technical view, through the daily charts, gold price was plotting out a rising wedge pattern which is a chart pattern that would have alluded to a potential fall in prices when it breaks the lower boundary of the pattern.

Following the release of the 25 basis point rate cut decision by the US Federal Reserve (Fed) and Fed chairman Jerome Powell hinting that there might be another rate cut this year, gold prices broke below the bottom of the wedge before bouncing off the psychological level of US$1,400.