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Gold Price Prediction – Prices Rally as the Dollar Slides following Trump Trade Annoucement

Concern over additional tariffs buoy gold prices
David Becker

Gold prices moved higher as the dollar declined following commentary from President Trump that a phase-one deal with China might not happen until 2020 or even after the Presidential election. With additional tariffs schedule to go into effect on December 15, 2019, the markets started to price in additional global economic contraction. With the US experiencing a weaker than expected ISM manufacturing report on Monday, Friday’s jobs report is beginning to take on greater importance.

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Technical Analysis

Gold prices rebounded sharply on Tuesday testing resistance near the 50-day moving average near 1,483. Support is seen near the 10-day moving average at 1,462. Additional support is an upward sloping trend line that comes in near 1,454 and then the November lows at 1,443. A breakdown below this level would lead to a test of the August lows at 1,400. Short term momentum has turned positive as the fast stochastic generated a crossover buy signal, and continues to accelerate higher. The current trajectory points to higher prices. Medium-term momentum has turned positive as the MACD (moving average convergence divergence) index generated 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 an upward sloping trajectory which points to higher prices.

President Trump suggested a trade war with China could continue well into next year while also threatening new tariffs on both France, Brazil and Argentina. The statement alerted investors, who had expected the US and China to move to a phase-one deal that would have taken future tariffs from coming into existence. The move appears to factor in Mr. Trump’s threat to expand tariffs beyond imports from China. Trump administration has proposed new levies on goods from France, Brazil and Argentina.

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