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Gold Price Prediction – Gold Whipsaws on Trump Commentary

By:
David Becker
Published: Aug 26, 2019, 15:38 UTC

Trump rhetoric whipsaws gold prices

Gold Price Prediction – Gold Whipsaws on Trump Commentary

Gold experienced whipsaw price action on Monday, surging during Asian hours, but easing following commentary from President Trump that China was coming to the table again. Trade has been front and center and on Friday, President Trump announced that he was upping the ante, increasing the tariffs on Chinese goods to 30%. Stock futures tumbled during Asian hours only to reverse during the European time zone. The dollar initially lost ground as US yields tumbled. The rhetoric is generating significant volatility in the gold market. In economic news, German business confidence continued to move lower, as the IFO reported that sentiment dropped to a 7-year low.

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Technical Analysis

 

Gold prices surged during the Asian time zone, breaking higher only to reverse course during the European and North American time zones. Gold appears to be following the rhetoric of President Trump. Prices tested short-term resistance near $1,560. Support on the yellow metal is seen near the 10-day moving average at 1,511. Despite the whipsaw price action, gold closed at a 6-year high. Short term momentum has turned positive as the fast stochastic recently generated a crossover buy signal. Medium-term momentum is turning positive as the MACD (moving average convergence divergence) index generated is poised to generate a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in the black with a rising trajectory which points to higher prices.

German Confidence is Falling

It’s clear that the contraction in German GDP is continuing to erode sentiment. On Monday, IFO reported a softer than expected confidence report that shows that German business confidence continues to fall.  The August IFO survey revealed that sentiment in the business climate declined to 94.3 from 95.8.  It has risen once this year, and that was on March 2019.  It now stands at a seven-year low which likely reflects a further contraction in EU growth.  The expectations component slipped to 91.3 from 92.1, and the current assessment eased to 97.3 from 99.6.

About the Author

David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.

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