Gold Getting A Bit Of A Boost

Gold Getting A Bit Of A Boost

Once again, gold getting a bit of a boost this morning from U.S-China trade relation tensions, plus a dipping dollar is giving precious metals a bump.

Meanwhile, the Commitment of Traders (COT) report released this past Friday shows traders added a small amount of new short Gold positions onto their books. Overall, the COT report still shows a net short position. And the way the market has been trading, neither side, long or short, has a concern about holding on to their positions. With no significant news on the forefront, most traders seem to be pretty confident a violent move in the price of Gold is not in the cards anytime in the near future. (Click the image below for a larger view.)

Commitment of Traders Gold Report September 2018

Brexit Breakdown and Gold

A non-Brexit deal is dollar positive, putting pressure on the yellow metal.

This past Friday, British Prime Minister Theresa May said talks with the European Union had hit an impasse. She stood her ground challenging the European Union to come up with their own ideas as talks started to fall apart.

At a summit in Austria on Thursday, EU leaders turned their back on the Prime Minister saying that she needed to give ground on trade and customs arrangements for the UK border with Ireland.

If you remember, back on June 23, 2016, the Gold market reacted positively to the Brexit news, rallying over $100 dollars in 2 days.

At that time, bedlam swept through global markets after the unexpected outcome, as Britain voters surprisingly decided to leave the EU 51.9% – 48.1%. Global equity markets got crushed. The pound was routed, falling to a 30-year low of $1.3230 (-12%) while the euro hit $1.0925 (-4.4%). A flight to quality emerged, with the US 10-year bond yield diving from 1.75% to 1.41%, at that time a 4-year low.

That day, the price of Gold took off, running through buy stops over key resistance levels of $1,283, all the way up to the $1,345 level. It finally peaked during early Asian hours that day at a high of $1,359. Financial markets recovered somewhat during European hours, with Central Banks making statements to attempt to reassure markets. This caused gold to retreat back the $1,307 level.

Overall, this unexpected result caught everyone by surprise giving the price of gold a huge boost.

This time the Brexit news was kind of expected, not causing any movement in the price of Gold.

It is difficult to recall an event that closely compares to that initial Brexit announcement. So the Gold market continues to look for ANYTHING to move its needle. The way the price of Gold has been trading, it seems like it will take a story with the magnitude exhibited back on that day in June 2016, to get it fired up once again.

Or maybe some unexpected news that comes out of the midterm elections will get the ball rolling.

In the meantime…

Have a wonderful Monday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.