Gold Price Prediction – Gold Reverse Following Trump Tweet

Gold prices whipsawed first moving higher, but knocking up against resistance. This was a function of risk on, which was mitigated by President Trumps tweet on Wednesday. The US/China trade dispute is now driving short-term price action. Volatility also has returned to the market, which is now beginning to spill over into gold volatility. The deadline for a deal between the US and China is expected to come to a head on Friday, when tariffs on 200-billion worth of Chinese goods are raised to 25%.

Technical Analysis

Gold prices attempted to move higher on Wednesday but were unable to remain buoyed and eased into the close. The resistance level, which capped gains Wednesday is seen near the 50-day moving average at 1,292. Support on the yellow metal is seen near the 10-day moving average at 1,279. Short-term momentum is flattening as the fast stochastic appears to be moderating. The trajectory of the rise is declining which reflects consolidation. Medium term momentum is still positive as the MACD (moving average convergence divergence) histogram, is printing in the black with a flattening trajectory which points to consolidation. The inability for gold prices to break out above the 50-day moving average provides a selling point for those who want to be short, ahead of Friday’s deadline.

Volatility is on the rise, and it’s beginning to spill over into gold prices. Volatility in the equity space surged to 20%, and then declined on Wednesday following President Trump’s tweet that China is willing to do a deal and they are ready to move forward this week. This is creating even more volatility as the markets are unsure what will happen, and Trumps tweets are allowing fear and greed to permeate the markets psyche.  Earlier today the Chinese government reported lower than expected trade figures, which could spill over into Chinese growth. Exports came in lower than expected and imports rose more than anticipated, which further reduced the trade gap.