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• Gold prices rose as capital rushed to the safety of Treasury bonds, sinking yields boosting the relative appeal of non-interest-bearing alternatives. An indecisive US Dollar helped open the door for the yellow metal to gain ground.

The spotlight now turns to September’s US CPI data. Absent an improbably dismal disappointment, the release will leave the recent steepening in 2019 Fed rate hike bets intact. Indeed, leading PMI surveys hint at upside surprise risk, meaning a further hawkish shift may yet materialize.

• Equity markets are breaking down and that could be the catalyst needed to light a fire under the gold market, according to some analysts.

In the current market environment, many analysts are keeping an eye on the $1,200 an ounce level since it represents the first hurdle gold needs to clear.

• “Right now gold is up but compared to the drop in stocks it’s still just trading at its base,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “Gold needs to at least clear $1,200. If it doesn’t, that is not a good sign.”

However, despite gold’s slow start, Cieszynski said that he is expecting to see higher prices as this is the perfect environment for the yellow metal.

“We haven’t seen this in a long time, equities are down and volatility is up. Capital is starting to find its way back into the old school havens,” he said.

• Jim Wyckoff, senior technical analyst at Kitco.com, said that there is a very good chance gold regains the $1,200 level as he thinks this is just the start of a correction in equities.

“There are technical and fundamental signs the U.S. stock indexes have put in at least near-term market tops, if not major market tops,” he said.

• George Gero, managing director with RBC Wealth Management, said that gold’s rally isn’t bigger because he suspects that some investors and traders are selling the liquid asset to maintain margins in their equity accounts.

However, he added that there are plenty of bullish factors that will continue to support higher gold prices.

“We still have midterm politics, we still have currency and other dislocations in Italy, Greece, Brazil, Argentina, Venezuela and now China adding to economic headlines,” he said. “All this means higher prices for gold.”

• Cieszynski also pointed out that while the breadth of the equity selloff is a bit shocking, the move is not a major surprise. He added that equities have been pricing in perfection ahead of the third quarter earnings, but companies are facing significant issues like a stronger U.S. dollar and rising interest rates.

He noted that investors were pushed out of their complacency after bond yields pushed to their highest level in seven years.

“Faced with a stronger U.S. dollar and rising interest rates something had to give and we are seeing the result,” he said. “Gold should do well because investors just don’t have a lot of other options.”

GOLD PRICE STUCK IN A RANGE, NEED TO BE PATIENT

Gold continues to be a difficult proposition with it having had little to no direction since August. This doesn’t mean we can fall asleep, but pressing it on either side of the tape at this time appears to be nothing more than speculation without a solid edge. Watch 1180 on the downside (close by) and the April trend-line and 1215 on the top-side.