Gold and Silver on Verge of a Rapid Rally or a Major Decline

FX_IDC:XAUUSD   Gold Spot / U.S. Dollar
Gold lost its 1% daily gain as prices sold off after U.S. President Donald Trump tweeted that a trade deal with China is "very close getting VERY close to a BIG DEAL with China. They want it, and so do we! Trump tweeted Thursday morning.

February gold futures immediately began to drop from $1,490 an ounce back to just above the $1,470-an-ounce level. At the time of writing, gold was trading at $1,472.90, down 0.14% on the day.

Trump’s tweet boosted investors’ risk appetite, TD Securities head of global strategy Bart Melek told Kitco News on Thursday.

“The tweet from U.S. President got risk appetite hopping here. The S&P 500 was up 0.9%. We had yields jumping higher; the U.S. dollar strengthened. All the elements that typically work for or against gold , worked against it today, “When the president comes out and tells the market that he is optimistic and this is getting done soon, the markets essentially start to believe that expectations of firming growth are for real and there is less of a chance the Federal Reserve cuts rates next year. “There is hope that equity markets will continue to perform well. There is a large vote of confidence in the form of significantly higher equity markets. That’s meaningful for people and drives capital away from risk-averse assets like gold and moves them into the risk-loving portfolio.”Gold rallied around 1% earlier on Thursday after jobless claims surprised on the downside, coming in at 252,000 versus the expected 213,000. Also, the ECB maintained its “highly accommodative” monetary policy in a continued attempt to push inflation higher in the first monetary policy meeting headed by the central bank’s new president Christine Lagarde.

“The only thing that could help the gold bulls at the moment is if someone comes out and says that they are nor afraid to walk away from the U.S.-China trade deal,”

Summary-We are witnessing sideways movement In the Gold and silver prices over the past week. Many analysts (Including us) believed that a $1450 price level for the yellow metal could be a strong support level which turned out to be positive. We were expecting a decline within the precious metal sector after Friday’s stronger-than-forecast report on U.S. nonfarm payrolls, which rose 266,000 in November however prices kept unchanged which is a slightly positive sign for Bulls. Technical chart and Economic indicators are giving a mixed picture however leaning more towards the bearish camp but we are taking caution and In order to secure our profit We have moved our stop loss in Gold at $1503 and In silver at $18. at the moment gold is near a key technical area – the 10-day moving average of $1,470.59 and the 20-day of $1,471.88. If gold can rally above here, the market may gain some technical momentum however the bigger resistance for gold stands at $1500(psychological level) and $1525 level. Overall it seems the rally we could see in the sector is fairly limited compared to the major breakdown within the precious metal sector which is yet to be seen.

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