You Can Hear A Pin Drop

June 28, 2019 - 6:41pm

 by Gary Wagner

As traders and market participants await news from Saturday’s one-on-one meeting between President Donald Trump and Chinese President Xi Jinping, the precious metals markets are so quiet that you can hear a pin drop. This face-to-face meeting between the leaders of the two superpowers is so important that US equities as well as the precious metals are trading in a narrow and defined range with little action prior to this weekend’s meeting.

As of 5:00 PM EDT gold futures basis the most active April contract is currently trading up $0.30 at $1412.30. Although the last two trading days have been extremely quiet very little net change, gold traded to its highest level this week when on Tuesday traders took gold futures to an intraday high just above $1442 per ounce. As we come to the last trading day of the month gold managed to exhibit its largest monthly gain in the last three years. In fact, gold gained approximately 8% in the month of June. The dollar index is currently trading in essence unchanged at 95.745.

According to CNBC, “Major Wall Street banks believe a cease-fire in which the U.S. still keeps some tariffs on China but postpones new ones is the most likely outcome this weekend.” It is believed that a best-case scenario for the outcome of the one-on-one talks this weekend would in essence be a truce or cease-fire, and that that outcome is extremely more favorable than in escalation in this current trade dispute.

According to analysts at Barclays “With both sides expressing a desire to resume talks, we see increasing chances of some sort of ‘ceasefire,’ in which the two sides will agree to halt further escalation of tariffs and/or non-tariff barriers while high-level negotiations take place.”

Goldman Sachs is on record stating that “Our political economists expect that the US and China will commit to resume negotiations and that the US will temporarily delay any additional tariff increases on Chinese imports. Despite a pause in tariff increases in the near term, they expect that there could still be additional tariffs later this year. Our economists’ base case remains a 10% tariff rate on the remaining $300 billion of Chinese imports, lower than the 25% rate that has been proposed by the USTR.”

The outcome of this weekend’s talks will have a major impact on the direction that gold prices take next week. An escalation of the current trade dispute would be extremely bullish for gold. If that scenario is the outcome, we could see gold spike dramatically higher as it opens on Monday morning in Australia. If real progress is made in which it is perceived to open the door to a quick resolution rather than stretching into 2020 then we could see a dramatic drop in gold prices as markets reopen on Monday.

Since the most likely outcome is a trade truce, the question will be how will gold investors and traders react to the news next week. In other words, the outcome of this weekend’s one-on-one meeting is still filled with uncertainty.

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer

P.S.
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Gold Forecast: Proper Action
After taking profits on Tuesday, we are currently flat with no active trades in gold or silver.
 
On Tuesday June 25, we sent out a special trade alert recommending that our subscribers take their current protective stop to the market to take profits on our current trade. We entered a long position at $1339, we sold or covered that long trade yesterday at $1410 for a profit of $7100 per contract. This is roughly a 70% return on this trade.
Gold Market Forecast
The direction that gold trades in next week will be highly contingent upon the outcome and perception of Saturday’s one-on-one talks between the presidents of the United States and China. Of course, there is no expectation that these two leaders will resolve the current trade war. However, if there is optimism that there will be a favorable outcome based on agreement of common ground issues that will allow negotiators to resolve the issue and return trade between the two superpowers to a period of normalization.
 
If there is optimism after the one-on-one talks conclude on Saturday, we could see gold pricing trade substantially lower as the markets open Monday morning in Australia and Hong Kong. However, if the result of the one-on-one talks are a continuation of the stalemate that currently exists, we would see gold spike higher upon the open next week.
 
Based on the importance of the outcome of Saturday’s talks continue to maintain a neutral stance and watch and listen carefully to be ready to act accordingly.
Sentiment Indicator:
Gold -> Neutral
Silver -> Neutral
S&P 500 -> Bullish
Bitcoin -> Bullish
Bitcoin fundamentals by Joseph M. Wagner II:

The world’s largest digital asset started this week after taking out the $10,000 dollar level last week Friday. BTC had been steadily climbing for the first half of the week until late Tuesday night when it jumped up greatly and by Wednesday was up 20% on the day and reached an intra-day high at $14,124 above the 61.8% retracement from the apex this retracement level sits at $13,622 which is where we are pegging current resistance at.

 It did however give all of that ground up on Thursday when it had a sharp correction which brought it down to the same lows achieved on Friday at $10,500 which is where we are pegging current support at.

Bitcoin Sets New all-time record high for volume equaling $42 billion in the last 24 hours of trading. Many analysts say that volume reported by sources such as Coinmarketcap or Ledgerman a lot has been done since the last great Bull Run up to the all-time highs and back then the record high volume on these same pricing watches that cover and average all the major exchanges.  

One thing is for sure this most volatile week is just a start of what is to come and we can expect higher pricing with the caveat of swift and steep corrections from time to time but this bull-run has not yet run its course.