Multiple Events Shape Gold Sentiment

April 11, 2018 - 6:23pm

 by Gary Wagner

With the U.S. financial markets closing for the day, we can see the outcome of numerous markets reacting to several different events. Gold futures are currently trending higher, although they are off of the highs achieved this morning at $1,369.40.

The Dow Jones Industrial Average is off by almost a full percentage point, currently trading at 24,000, which is a net decline of 217 points on the day.

Military Action in Syria 

Of all the events currently shaping market sentiment, the possibility of a U.S. airstrike in Syria is the newest issue that market participants are presently factoring into their market forecast.

President Trump indicated this morning that a missile attack on Syria in response to their use of chemical weapons was imminent. In a tweet, President Trump said, “Get ready Russia, because they will be coming, nice and new and smart!”

As reported in MarketWatch, “U.S. stocks closed in the red on Wednesday, as worries about geopolitical developments deflated the buying mood on Wall Street. An early morning tweet by President Donald Trump implied the possibility of a military strike in Syria and set the downbeat tone for the session. Threat of a military strike in Damascus comes after a suspected chemical-weapons attack that killed civilians in the town of Douma over the weekend.”

Fed Minutes

Gold pricing remained at a seven-week high until the Federal Reserve released the minutes from last month’s FOMC meeting. Analysts interpreted the minutes as having a more hawkish demeanor than previously believed. This caused gold pricing to trade off of the highs. However gold pricing finished strongly to be up $10 at $1,355.90.

Trade Dispute

It seems market sentiment has shifted away from the current trade dispute between the United States and China. U.S. Agriculture Secretary Sonny Purdue’s statement seemed to calm market sentiment when speaking at a hearing of the Senate appropriations subcommittee on agriculture by saying, "Our first goal is to negotiate ourselves out of the saber rattling that has occurred and to make sure that these market disruptions do not have a permanent impact." 

$209 Billion Deficit

According to Reuters, the U.S. government ran a $209 billion budget deficit in March. That is an increase of $33 billion when compared to the same month last year and is well above estimates. This takes the current deficit for the fiscal year, which begins in October, to $600 billion, $73 billion above the same period’s deficit in fiscal 2017.

There are always multiple events shaping investor sentiment, however, the multitude and depth of current geopolitical, political, and monetary concerns are of a increasing concern. As such we could see continued pressure in U.S. equities and higher pricing in safe-haven assets such as gold.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

Yesterday we sent out a TRADE ALERT: BUY JUNE GOLD @ MARKET (1347.90 CURRENT). PLACE STOP @ 1324

Maintain Long June gold @ 1348 and stop @ 1324*

  • We will raise the stop over the next 48 hour *a trade alert will be sent with new stop placement.

 

Gold Market Forecast

Gold is reacting to a number of events. Collectively they could take gold pricing above $1400.