A China Trade Deal is Dependent on One Thing — Do I Want to Make it?

President Trump speaking at a news conference in London today drew a hardline in the sand as to his position about the current trade negotiations between the United States and China in which he said “A China trade deal is dependent on one thing — do I want to make it.”

But it was his remark about a timeline to resolve the trade war that sent U.S. equities plummeting, and moved gold strongly higher. “I have no deadline, no. In some ways, I think it’s better to wait until after the election if you want to know the truth. But I’m not going to say that, I just think that.”

The fact that the president is willing to wait until after the election before completing negotiations with China changed market sentiment quickly. The Dow Jones Industrial Average traded 450 points lower before recovering. With less than ½ hour left in trading the Dow is currently only down 270 points and currently fixed at 27,513. His statements also caused gold futures to trade to a high of $1487.70, and as of 3:34 PM EST the February contract of gold is currently up $14 at $1483.20.

Comments by the president were quickly followed by comments from Commerce Secretary Wilbur Ross in an interview on CNBC, in which he said that President Donald Trump is “serious” when he said trade talks with China may last past the 2020 elections. Ross added that the White House has no “time pressure” to get a deal done. The
Commerce Secretary also said that the president would impose another round of tariffs on Chinese goods on December 15^th unless there was “some real reasons (to) postpone them.”

On a technical basis gold traded to a high just at the 100-day and 50-day moving average which form minor resistance at approximately $1488. The current level of major resistance is at $1496.10, the 23.6% Fibonacci retracement. Considering that gold pricing had difficulty as it formed a double bottom at the 38.2% retracement of $1451.70 over the last two weeks, today’s move is significant and could in fact be signaling the resumption of a rally.

Ever since gold hit its highest trading point this year at $1565 per ounce beginning of September it has been in a defined downtrend. Gold hit its lowest trading point during the correction on November 12^th when market forces took gold to $1446 per ounce before recovering. Over the last five trading days gold has moved off of those lows closing at its highest price since November 7^th.

Wishing you as always, good trading,