The world is still waiting for any news out of Europe as the North American trading session hands the baton to Asia which will have a couple of Kiwi and Japanese economic releases this evening. Due to the waiting game most investors were playing, many markets failed to provide much excitement. However, once news starts trickling out about how the Eurogroup plans on handling their Greek brethren, the activity most assuredly will pick up.
One of the instruments that could prove intriguing is Gold. The yellow metal has been gradually floating lower over the past few weeks and has carved out a declining channel in the process. Given the scenarios that could potentially come out of Europe (Grexit or No Grexit); Gold could find itself breaking out of that channel rather quickly. If Greece were to announce they are leaving, the demand for Gold might kick in to overdrive as people seek the safe haven status of the asset. Then again, if Germany and Greece can kiss and make nice with one another on the eve of St. Valentine’s Day, Gold might either continue to stay in its channel or break lower with more vigor.
Simply looking at Gold’s current position in its channel, the technical argument for a rally back to the top of the channel appears strong. Adding on to that support is a 61.8% Fibonacci retracement of the 2015 low to high near current prices. If those support levels can hold, Gold may be ripe for a surge, particularly if an announcement on Greece takes longer than expected and investors get nervous.
