Gold prices consolidated after surging higher on Thursday driven by demand to enter into a safe haven currency. Yields edge lower allow the dollar to ease paving the way for higher gold prices. President Donald Trump was on the tape on Thursday stating that he believe the Federal Reserve was being reckless and increasing interest rates was unacceptable. He continued the conversation into Friday but was refused by some of his surrogates. What is clear from the risk off environment this week is that investors realize that there are risks associated with the Fed increasing rates and the trade spat the US and China are having.
Gold prices broke out of a 2-month range hitting highs not seen since early August, and then consolidated on Friday. Prices surged above resistance which is now short term support near a downward sloping trend line at 1,212. Additional support is seen near the 10-day moving average at 1,200. Resistance on the yellow metal is seen near the July highs at 1,265. 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.
China reported September trade figures which showed that exports rose by 14.5% year over year versus expectations that exports would rise 8.2%. the lower than expected import numbers showed that the trade surplus widened to $31.7 billion from $27.9 billion as exports rose more than import in August and this is likely to inflame tensions that are already high. There are reports that President Trump and President Xi will meet at the G20 meeting in November which is scheduled to be held in Argentina.