Gold Cannot Sustain Recent Highs
The events and market sentiment which moved gold higher yesterday shifted today resulting in sharply lower gold prices. Gold prices surged to a 21-month high following a tweet made by President Trump implying an immediate missile response to the chemical weapons attack in Syria.
This 21-month high was short-lived. Beginning with yesterday’s release by the Federal Reserve of last month’s FOMC meeting minutes, gold prices began to move off of the highs achieved earlier that day.
Yesterday his tweets warned Russia that “missiles will be coming, nice and new and smart”.
This was followed by an immediate response from Russia in essence saying that they would shoot down any incoming missiles to Syria as well as retaliate against the point of origin of those missiles.
Today tweets from President Trump appeared to soften his response to the chemical weapons attack in Syria. Trump moved away from an immediate response when in an early morning tweet, he said “Never said when an attack on Syria would take place. Could be very soon or not so soon at all!"
This was followed is statement made during a meeting with farm state lawmakers "We're looking very, very seriously, very closely, at that whole situation. We have to make some further decisions. So they'll be made fairly soon."
Although yesterday’s high was short-lived, it was the first-time gold had traded to a to this level. In fact, this was the first occurrence of gold trading above $1365 since March 2014.
The highs achieved in March 2014 were significant. They were first occurrence of gold trading to a higher high and a higher low since the multiyear correction began in the middle of 2011. Prior to that time gold prices consistently made lower lows, and lower highs.
Yesterday those weekly highs were challenged when gold prices traded to $1369.30. However, this new high could not be sustained even for a day. Today traders bid down gold futures pricing to $1337, a net decline of $22 on the day.
Nonetheless yesterday’s highs are significant even though there was no follow-through today. The events and factors that took gold pricing sharply higher remain in the fabric of market sentiment even though they have once again moved to the back.
The current trade dispute between the United States and China, as well as a possible missile attack in response to Syria’s use of chemical weapons are still unresolved and most likely will reemerge at some point in the near future.
Wishing you as always, good trading,