Gold is Handed a Trump Card…

Charles Thorngren

Anyone paying attention to the news recently will be aware of Donald Trump’s (some say) ingenious plan to impose global trade tariffs to promote US jobs and business under his “America First” banner.

Amongst the doom and gloom that followed the announcement that he was actually going to go through with it – and the horror when it came to fruition – was a collective sigh of relief from gold bugs.

As is well known, uncertainty in the markets has always been a winner for gold. A crisis of any magnitude – especially a sustained one – is a great boost for the yellow metal.

This has to be tempered with the recent developments in Singapore. The meeting between Donald Trump and Kim Jong Un – with the resultant lifting of sanctions, the scrapping of nuclear weapons, and the cessation of exercises in the South China Sea with South Korea – means that a raft of uncertainty has been eliminated. This is good for trade and world peace – but not necessarily for gold!

Taking a look at the weekly chart of gold it can be seen that throughout the remainder of the year – and forward into 2019 – gold is reaching a crucial point at the crossing of the high and low trendlines.

Gold Weekly Chart

Despite the recent fall in the gold price, the trend is towards higher lows – the usual mark of an uptrend. This is a massive comfort long-term and looking at the chart right now can be seen as an obvious buying opportunity going forward.

The higher lows are quite prominent on the trendline, at 2) and in the lower highs at the trendline of 1). This chart goes back to January 2016, and clearly shows that gold has been caught in this wedge for a couple of years now.

At any point on our made-up scenario (in orange at the point of the wedge) Gold could surprise and breakthrough the trendlines to rally or fall accordingly. It is difficult to predict. If you look at the fall of December 2016 (to the left of 2) on the lower trendline) You will see that although it fell briefly below the line it quickly recovered to rally back to the $1260 level.

The EMA (exponential moving average) lines on the chart are now mirroring the signals of an uptrend with the 21-day EMA on top, and the 55-day, 100-day, and 200-day lines – in that order – below them. This is a complete reversal of the order of these lines at the beginning of January 2016.

For those who want to find out more about technical analysis, an excellent, informative, in-depth, explanation of moving averages and the way they relate to charts will find this article is very useful – if a little technical for beginners.

It is all too easy to follow the daily, four hourly, hourly, and lower timeframes on charts and to become paranoid about the slightest rise or fall in the price. Looking at the weekly and monthly charts, Together with the moving averages, puts some perspective into the price movements and enables a more objective view of the market and what it is likely to do.

As you can see from this chart the medium-term future of gold shows an upward trend – It simply remains to be seen how the long-term trend pans out as the wedge bites.

We see this point in time as an opportunity to buy into gold and build an allocation ready for the next rise. We remain bullish on gold in both the medium and long-term.

Noble Gold specializes in IRAs and 401(k) rollovers through precious metals and cryptocurrencies investments.

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