Multiple Events Shape the Global Financial Outlook

March 15, 2019 - 5:58pm

 by Gary Wagner

Considering the impressive global equities recovery and rally resulting from bullish risk-on market sentiment, gold held up rather well this week. Even with yesterday’s strong $13 plus decline, the precious yellow metal will end the week with modest gains.

As of 3:30 PM Eastern standard time gold futures, basis the most active April contract is trading up $6.90 and fixed at $1302 per ounce. In fact, silver, platinum, and palladium are also all trading higher on the day. Although higher pricing across the board in the precious metals has been aided by tailwinds provided by a weaker U.S. dollar, it was the predominant bullish sentiment that resulted in traders bidding the precious metals higher today.

Recently both gold and global equities have been moving in tandem to higher pricing based on accommodating statements made by the three most powerful central banks. The central banks of the United States, the European Union, and China, have all signaled a willingness to act against a global economic slowdown.

The Federal Reserve and the European central bank have both indicated that they will not raise rates immediately. The European Union has gone as far as saying that there will not be any rate hikes until the end of the year, and the Fed has signaled that they will continue a path of patients regarding rate hikes.

In the case of China, they are prepared to implement huge tax cuts and infrastructure spending. As reported in Reuters yesterday, “China has promised billions of dollars in tax cuts and infrastructure spending to help businesses and protect jobs, as economic momentum is expected to cool further due to softer domestic demand and the trade war with the United States.”

Geopolitical Hotspots Continue or Emerge

This week contained threats, actions and issues that have alarming and potential repercussions in the weeks ahead. These hotspots were global in nature as they involve North Korea, Great Britain and to a lesser extent New Zealand.

A threat from North Korea’s leader, and a cowardly heinous act by a group of individuals in New Zealand are the saddest and worst ways in which gold pricing can be supported.

As reported in the New York Times today, “North Korea threatened on Friday to suspend negotiations with the Trump administration over the North’s nuclear arms program and said its leader, Kim Jong-un, would soon decide whether to resume nuclear and missile tests.”

Then there is the heinous act committed by a group of individuals which resulted in a mass shooting which left at least 49 people dead at two mosques in New Zealand.

Kick the can

It seems there is a game played being quite effectively by politicians of many countries. This game is known simply as, kick the can.

The United States is undoubtedly one of the best at taking unsolved issues or financial budgets and simply moving the timeline, rather than being able to agree on a way to resolve the issues by making the needed hard choices. However, it was the United Kingdom this week that was able to duplicate a successful round of kick the can as they voted to ask for an extension on the March 29th deadline on Brexit.

As reported by MarketWatch “The British Parliament voted to request an extension of the March 29 Brexit deadline on Thursday, concluding key Brexit decisions for this week. The proposal, brought by the government, denotes an extension to June 30 if Parliament can agree on a withdrawal deal by March 20 -- next week Wednesday -- or else a longer extension. This has in turn led to speculation about whether Prime Minister Theresa May could put her deal to a vote for a third time next week.”

Collectively these fundamental factors, including a more accommodating stance by the three most powerful central banks, optimism on a resolution to the current trade U.S. - China trade war, the reemergence of threats from North Korea and Brexit, will most certainly have a strong impact on the financial markets next week. They most certainly could continue to create bullish market sentiment in global equities as well as gold pricing.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action

Friday morning, March 8th, we issued a trade alert to buy June 2019 gold (GC M19)

Maintain long gold at 1305

Maintain Stop at 1287.13

Gold Market Forecast

Although gold lost significant ground yesterday, we saw a majority of those declines erased with today's modest gains. Gold did close higher on the week. On today’s report we will continue to define why we believe that the yesterday's decline did not cause any major chart damage. We will cover our upside target as well as the price points that we need to watch, on the way. We will explain why we are looking for gold to trade higher in the week ahead.

Sentiment Indicator:
Gold -> Bullish
Silver -> Bullish
S&P 500 -> Bullish
Bitcoin -> Bearish