Gold consolidates below recent highs as risk appetite returns

• Renewed appetite for risk saw commodities perform well across the board.  
• Formal withdrawal of the extradition bill in Hong Kong is catalyzing a sharp risk-on move.

Gold is consolidating in early Asia following a mixed price action overnight whereby gold ended higher, but bulls capitulated from the highs as  the formal withdrawal of the extradition bill in Hong Kong is catalyzing a sharp risk-on move.

Gold prices pushed above USD1,550/oz, with a weaker USD helping support investor demand – (The gains in rest of the sector were even greater. Silver gained 2.4%). Spot gold added 0.40%, moving higher from a low of $1,534.01 to a high of $1,557.10 while December gold put on $4.50, or nearly 0.3%, to end at $1,560.40 an ounce, extending the 1.7% gain made on Tuesday, closing around the highest for a most-active contract since April 2013.  

Money managers see fewer event risks from Brexit and Hong Kong

 Gold can likely continue to consolidate or, in a recovery in the Dollar, move lower while money managers see fewer event risks from Brexit and Hong Kong.  

“While protest leaders suggest that the city’s five demands have not been met, the bill withdrawal could potentially see tensions simmer. Considering that positioning is aggressively skewed long, fewer event risks could see gold consolidate ahead of the various central bank meetings in September, despite its still-attractive luster,”

analysts at TD Securities argued.  

Gold levels

1,590 is as the 127.2% Fibo target area and if breached, bulls can  target the 78.6% Fibo of the 2011 to YTD range located in the 1,730s ahead of the triple-top peaks of the 1,800s. To the downside, 1,478 was the 13 Aug volatility spike low which guards the 19 July swing highs at 1,452.93.