Whilst gold is up just a modest 3.9% this year, it’s rallied 14.8% since the 2018 low and the trend structure remains bullish. Furthermore, by yesterday’s close the shiny yellow metal had racked up its most bullish 4-day run since June 2016 to underscore its recent pickup of bullish momentum.
The main culprit for gold’s impressive display is thanks to Donald Trump’s latest threat of tariffs on Mexican goods. Not only is gold receiving safe-haven flows, but its move higher has also been supported by a weaker USD. Markets seem wary as to whether Trump can fight a trade war on two fronts (Mexico and China) which has seen the US dollar suffer.
However, stopping just shy of the 2019 high, a solid reversal for the US dollar yesterday has left a large bearish hammer below key resistance. That its occurred whilst being overextended from it upper Keltner band strongly suggests the move is exhausted over the near-term. Therefor we expect prices to retrace or consolidate before gold eventually breaks to new highs.
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