Gold price is trading slightly lower early in today’s Asian session as the dollar gains ground on news of Kim Jong Un’s bad health. XAUUSD is currently trading around $1,689.00, down from where it opened at $1,694.16.
There were reports that North Korea’s Supreme Leader underwent cardiac surgery earlier this month. It was initially reported that Kim Jong Un was recovering in his private villa, thus his absence from recent public events. However, NBC cited US officials who said that the North Korean Leader is in ‘grave danger’ following his surgery.
The reason why the US dollar is finding bids against risk currencies on this report could be because of a slight case of risk aversion. North Korea has shared relatively peaceful relationships with the US and South Korea since Kim Jong Un came to power. However, if these rumors are later confirmed to be true, markets could switch to full risk off mode on concerns that the next North Korean leader may not be as amenable to international relations. Maybe then we would see gold price rally as investors seek its safe haven credibility.
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Gold Price Outlook
On the daily time frame, it can be seen that gold price has recouped some of its gains back to the 38.2% Fib level (when you draw from the low of April 1 to the high of April 14). The current are where it is trading, around $1,688.00, also corresponds to the highs of XAUUSD on March 9. A close above the high of yesterday’s candlestick at $1,702.13 could confirm that there are still buyers in the market to push gold price to its April 14 high at $1,746.93.
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It’s worth noting, however, that the 4-hour time frame suggests a more bearish setup for XAUUSD. By connecting the lows of March 20, March 23, April 1, and April 9, it can be seen that gold price is trading below trend line support. This trend line break could indicate that a bigger sell-off is ahead with near-term support around $1,638.80 where XAUUSD topped on March 26.More content
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