Global markets have had a quiet day in most trading pairs, bar anything that contains an element of safety after the recent global escalations with North Korea. The small country on the Korean peninsula continues to be a thorn for the US and Asian economies as they look to deal with the nuclear issue head on, the question is how long and what will it take. A question that the markets are starting to ask as they get nervous about the whole affair. One of the major things though is that there is nothing to be gained out from a direct war for both sides, and flexing a muscle could lead to the collapse of the region and the start of something far more brutal in the long run. So for now with investors starting to get worried safe havens are the way to go, except for the Yen which is not feeling the love as it’s close to the potential conflict.
Gold and silver have been the bigger winners today as they gapped on the charts on opening this morning as investors had hedged over the weekend. The rise upwards was no surprise for the market and gold had managed to hold above the 1300 mark for some time. The push upwards to 1338 for gold is a strong move but it also hit a hard level of resistance that will be hard to beat going forward. If tensions are raised further, and they look like they may be by the warnings of an ICBM test then I would expect gold to potentially jump a lot higher and quicker – especially if the US felt threatened. If we see a thawing of the tensions then I would expect gold to slip back down the charts to 1313 and 1295 in the long run – with a long term goal of dipping back below the 1300 mark; if the global economy stays on track.
Silver has also benefited heavily from the hedging of risk in metal markets, and even I was a little surprised by the push through resistance of 17.696 on the market open. It has remained a strong level of resistance for some time, and I half expected a double top scenario but this was not to be. For traders looking to target higher highs then 18.214 and 18.607 are the next major levels of resistance, with 18.607 likely to be a strong level of resistance. In the event silver does fall back down to earth then 17.696 and 17.352 are likely to be the first levels of support, with 16.599 likely to be the major support level that could hold back further falls in the market. If silver does also decided to play more to technical’s then the 200 day moving average is a very strong indicator and acts as dynamic support and resistance. I would expect that if tensions do ease of that it would come back into play.