Gold: Déjà vu all over again

The gold price action seen in Asia post Italian referendum results is largely in line with the activity seen on the US Election Day.

Italian PM Renzi suffered a humiliating defeat in a referendum over his plan to reform the constitution, throwing the country and the euro zone into confusion.

The populist parties such as the 5-Star Movement are likely to benefit the most from the political situation.

Consequently, the safe haven metal rose to a high of $1188 before falling back to $1175 levels.

The overall price action is similar to the one seen on November 9, when Trump victory initially led to risk-off and a rally in the metal to $1337.34. However, prices had erased gains to end at $1277 levels.

Gold Technical Levels

A move back above 10-DMA of $1184.50 would open doors for $1200 (zero figure), above which the gains could be extended to $1211.73 (Nov 14 low). On the other hand, a breakdown of support at $1171.07 (Nov 25 low) could yield a sell-off to $1166 (Friday’s low) and $1160.95 (Thursday’s low).