Gold continues to trade in the pattern that has developed since the Fed began raising rates. This consists of a weakening pattern into the anticipated Fed meeting, a blip lower on the announcement and then a strong rally.
We suggested that gold would potentially see a $1,307 print ahead of the announcement, with a suggestion to enter, when the news broke. The initial bounce to the $1,327 level was within reason but then gold prices blew higher on concerns of other developments.
China’s push-back on proposed U.S. tariffs worried the market and hurt the dollar as traders’ concerns about China’s continued support of the U.S. treasury market came into focus. Trade fears with China have impacted not only the dollar but equity markets, which tested their February lows.
President Trump’s replacement of H. R. McMaster with John Bolton, as National Security Advisor worried the market in respect to North Korea, as Bolton is considered a more aggressive war hawk. There was enough turmoil to force a short squeeze in the metals.
The market is close to a breakout, but the technical picture requires a bit more work. We see continued resistance at the $1,357 level and the market requires further short-term dollar selling to break through this line. Initial support rests at $1,342.