Trump Mulls Emergency Action, YTD Highs in Focus


Gold Price Analysis and Talking Points:

  • Gold May See YTD Highs as Trump Takes Emergency Action
  • Fundamental Support Remains Amid Strong Central Bank Buying

See our quarterly gold forecast to learn what will drive prices throughout Q1!

Gold May See YTD Highs as Trump Takes Emergency Action

As investors continue to ponder growing downside risks, gold prices remain elevated. Following the worst US retail sales figures in a decade, the precious metal saw its largest intra-day gain in 2-weeks. A potential catalyst that could see the gold reach its YTD peak ($1326) is President Trump’s remarks on the border from 1500GMT. While another government shutdown looks to be avoided after the US Senate and House passed the government funding and border security bill, with the agreement now sent to Trump to sign. The President has indicated that he will declare a national emergency, allowing for $8bln to be dedicated to the wall, which is not only above the $1.4bln in the border security bill but also above the initial demand of $5.7bln. In calling a national emergency, political risks may begin to way on risk sentiment thus providing safe haven flows for gold.

Fundamental Support Remains Amid Strong Central Bank Buying

Among the fundamental drivers of the upside in gold has been through last years central bank buying spree, which may continue throughout 2019. After a 2yr hiatus, the PBoC have shown gold reserves rose for a second consecutive month to 59.94mln ounces, further reinforcing the viewpoint that gold buying is to remain prominent amid the waning global growth outlook.

Gold Price Analysis: Trump Mulls Emergency Action, YTD Highs in Focus

Source: Refinitiv, Chinese Gold Reserves.

What You Need to Know About the Gold Market

GOLD PRICE CHART: Daily Time-Frame (Mar 2018-Feb 2019)

Gold Price Analysis: Trump Mulls Emergency Action, YTD Highs in Focus

Chart by IG

Resistance is situated at the YTD high ($1326), whereby a break above could see a move towards $1350. Near-term support sits at the psychological $1300 level, while $1280 also remains key to maintain the uptrend.

GOLD TRADING RESOURCES:

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX





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