Gold Consolidates After Yesterday’s Sharp Sell-Off

Gold futures seem to be consolidating after yesterday’s sharp decline of almost $30. Yesterday it was a combination of an extremely strong US dollar along with robust selling pressure that took the precious yellow metal dramatically lower on the day.

Spot gold declined by 1.82% yesterday with the dollar index contributing .75% of that decline, and selling pressure contributing the other 1.07%.

As of 4:47 PM EDT gold futures are $1.00 lower on the day at $1511.30 after opening at $1510.90, and trading to a low of $1507.10, approximately $0.20 below yesterday’s low. It must also be noted that a major component of yesterday’s decline was the strength of the US dollar with the index trading at 98.65 after gaining roughly .75% on the day. The dollar is trading higher today, up +0.18% and fixed at 98.94.

The fact that gold did not break below $1500 per ounce either yesterday or today is significant. It indicates that there are still many unknown outcomes of the current fundamentals the have fueled the current rally in gold. Now an additional new development of the formal impeachment inquiry which was launched on Tuesday by House Speaker Nancy Pelosi could add additional fuel to the elevated concerns which have supportive of higher gold prices.

As far as the prospect of impeachment of President Trump, the release of yesterday’s transcript of the conversation between President Trump and the president of Ukraine are definitely being interpreted down party lines. A survey indicated a clear partisan divide with 4% of Republicans and 73% of Democrats surveyed supporting impeachment.

As reported by USA today, “sometimes truisms are true: it’s not just the crime; it’s the cover-up.”

“A whistleblower's complaint released Thursday morning accused President Donald Trump not only of pressuring a foreign leader to dig up dirt on a political rival but also of trying to hide the account of their conversation. The House Intelligence Committee's public hearing that followed, featuring testimony from the nation's top intelligence official, provided a map for a debate that is all but guaranteed to transfix Washington for months.”

Any possibility that the formal impeachment inquiry will lead to a formal vote to impeach Trump would certainly not only have a negative affect US equity but could move gold sharply higher over the next few months. With so many fundamental events and potential geopolitical hotspots that could flare up at any moment, gold is in position to move higher.

Wishing you as always, good trading,