Gold isn't getting much attention today as the SpaceX IPO steals all the bandwidth and we wait on some clarity on Iran but I think it's a clear peace trade.
The main catalyst will ultimately be reserves managers as they add to holdings in a messy world with a US President willing to enter a badly-thought out war and alienate allies in the process. Turkey was forced to sell $120 billion in gold early in the conflict to defend its currency, as it's a huge oil importer.
Since that moment, gold has struggled on fears that a spike to $150 oil would cause other countries to liquidate reserves. If the threat of war passes, we should see reserve managers rebuilding gold holdings, or adding to them. On the downside, this episode proved that -- in many ways -- oil is more valuable than gold. So instead of accumulating gold reserves, countries may choose to stockpile oil. I would even argue that's wise (though certainly more logistically challenging).
Much may depend on the contours of the deal and whether it's viewed as so unfair as it will inevitably lead to a future conflict.
In the short-term, I'm also watching the technicals .Gold is near the highs of the day, up $18 to $4231 but hasn't been able to break above the 'post peace' high just yet.
If gold can crack that level, it's still not clear sailing as it will need to erase this week's decline at minimum. It will take a rise to $4328 to leave it flat on the week and trace out the start of a reversal. I don't think I can get really bullish until it breaks $4545, which ould take a more than $300 move from here.
More likely is that we get stabilization in the $4200-$4400 range and try to build a base from there.
I would be more optimistic if we were seeing aggressive buying today but so far it's not happening.
