Gold is trading fractionally higher today, with the most active futures contract (August 2019) currently bid up by $1.40, this as of 5 PM Eastern daylight Time. However what is most impressive about today’s move was the fact that gold closed very much off of the lows achieved today which came in at $1323.60.
With the recent moderate decline which began overseas, Monday morning in Australia, today’s lower low and price recovery indicate that traders and market participants are looking at various price points to see if there’s potential price support.
Sunday – Mondays selloff was largely attributed to 1/11 hour deal between the United States and Mexico which averted the initiation of a 5% tariff on Mexican imports to the United States. While this event certainly lessen the overall tension due to the conflict between the United States and its trading partner. However there is still the big 800 pound elephant in the room-China.
Without the two superpowers reigniting some genuine negotiation skills and compromises on both sides the stalemate that has been evident over the last month will continue at this level or even deepen. The facts remain that without a viable resolution which benefits both sides the global economic repercussions will continue to be felt and in fact deepen. That being said although the deal made by Mexico on the United States carry significant importance it is but a small fish in a deep sea of trade war discontent.
One significant factor that we have noticed this week was the decoupling of the tandem run that characterized both gold and US equity price movement. Is quite possible that US equity traders felt that the deal reached by Mexico on the United States would certainly benefit US equities and not have that same underlying force to support Gold prices.
The common ground that equities and gold have right now is that there both moving in the same direction based upon the belief that the Federal Reserve will implement a number of rate cuts this year.
With the jobs report already complete it is the G 20 meeting being held later on this month in Osaka Japan that traders and investors and market participants will observe closely to gain any insight and information as to where this current conflict is headed.
Wishing you, as always, good trading,