President Trump’s Mixed Messages Continue to Confuse and Confound Market

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In a speech to the Economic Club of New York today, President Trump said, “We’re close -- a significant phase one deal could happen, could happen soon.” He said this within the context of a statement claiming that China is “dying” to make a trade deal with the U.S. and the first step of a broader agreement is close to being completed.

However, according to the full text of his speech which was released by C-SPAN the president also said, “again, if we don’t make a deal with China - look, I had a deal. We had a deal… If we don’t make a deal, we will substantially raise those tariffs. They’ll be raised very substantially. That’s going to be true for every other country that will mistreat us too.”

Although he sent mixed messages in regards to the 18-month long trade war between the United States and China he was very clear on his accomplishments during his term as president. As reported by Yahoo finance, President Donald J. Trump cheered the strength of the U.S. economy and said that the ‘war on American workers’ has come to an end. “We have ended the war on American Workers, we have stopped the assault on American Industry, and we have launched an economic BOOM the likes of which we have never seen before!”

The president also revisited his long-standing criticism of Chairman Jerome Powell and the Federal Reserve’s actions over the last few years. He said his administration had “delivered on our promises” and “exceeded expectations” on the U.S. economy, “despite the near record number of rate increases and quantitative tightening” that was “far too fast an increase and far too slow a decrease.”

Although he remained on topic in regards to his criticism about the Federal Reserve, and continued to tout how great of a job he has done in terms of economic expansion in the United States, his mixed messages about the trade war, moved gold pricing from losses on the day to fractional gains.

After trading to a low this morning of $1446.20, gold futures are currently up $2.10, and fixed at $1459.20. This as of 4 PM Eastern standard Time.

Technical Studies Continue to Identify a Strong Level of Potential Support

If you recall from yesterday’s opening letter, we spoke about the fact that our technical studies have indicated a potential bottom and level of support approximately $11 below current pricing. Using a Fibonacci retracement, which defined that the market could trade as low as $1446 per ounce, that based upon a .23% Fibonacci retracement. At the time we wrote yesterday’s article gold was trading at $1457.40, after factoring in yesterday’s net decline of $5.50 on the day.

In trading today, we saw gold prices drift to exactly the low identified ($1446) utilizing Fibonacci retracement theory, before recovering. This resulted in gold gaining approximately two dollars on the day. While the technical studies we used yesterday need additional confirmation in the form of a bullish confirmation candlestick pattern before we can say that gold in fact found support and is moving higher. today’s intraday low was the price point predicted, and  a subsequent recovery would lend weight to yesterday’s observations and identification of $1446 as a potential level of support for gold futures.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer