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Gold Trades to Highest Yearly Value Before Trading Below $1500 and Recovering

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Gold futures have traded in an expanded price range with the most active December contract trading to a high of $1546.10, and the low of $1488.90, resulting in a trading range of over $57 today. As of 3:50 PM EDT December gold is bid at $1514.50 which is a net decline of $2.70 on the day. The highs were achieved in trading overseas last night as market forces moved gold pricing sharply higher.

However, profit-taking came into the market during mid-morning trading in New York after it was revealed by U.S. trade officials that they would delay the onset of additional tariffs which were set to go into effect on September 1. Statements from U.S. trade officials said that these tariffs will go into effect in the middle of December. This news took gold pricing dramatically lower and under pressure as it traded to the low of $1488.90.

The Office of the United States Trade Representative issued the following statement today, “The United States Trade Representative (USTR) today announced the next steps in the process of imposing an additional tariff of 10 percent on approximately $300 billion of Chinese imports… Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles.  Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing. “

That being said gold prices recovered sharply as market participants shifted their focus back to the protests and tensions in Hong Kong which have escalated over the weekend. Protesters have taken over the airport which is prompted China to move some of its troops close to Hong Kong.

According to Bloomberg News, “Hundreds of black-shirted protesters staged a sit-in at the departure’s hall at Hong Kong International Airport, preventing some checked-in passengers from reaching their planes. Airlines including Cathay Pacific Airways Ltd. had already canceled hundreds more flights Tuesday, the day after the government decided to briefly shut the airport during a mass demonstration in the arrivals area.”

Although gold pricing is still trading under pressure, the current decline is almost entirely due to U.S. dollar strength. Spot gold is currently trading down by $8.10 today and fixed at $1502.40. Dollar strength is responsible for $6.80 of today’s price decline, with the remaining decline of $1.30 attributable to market participants bidding the precious yellow metal lower.

The fact that physical gold and gold futures are trading above $1500 per ounce is noteworthy and indicates that even with today’s selloff there is still strong support at this price point.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer