[Video] Gold Performs A U Turn At The YTD Highs

Gold's strong rally came to an abrupt end just shy of the 2019 high, thanks to a broadly stronger USD. Whilst we think it will continue its rally, we're looking for a little mean reversion first.

  • Whilst gold is up just a modest 3.9% this year, it’s rallied 14.8% since the 2018 low and the trend structure remains bullish. Furthermore, by yesterday’s close the shiny yellow metal had racked up its most bullish 4-day run since June 2016 to underscore its recent pickup of bullish momentum.
  • The main culprit for gold’s impressive display is thanks to Donald Trump’s latest threat of tariffs on Mexican goods. Not only is gold receiving safe-haven flows, but its move higher has also been supported by a weaker USD. Markets seem wary as to whether Trump can fight a trade war on two fronts (Mexico and China) which has seen the US dollar suffer.
  • However, stopping just shy of the 2019 high, a solid reversal for the US dollar yesterday has left a large bearish hammer below key resistance. That its occurred whilst being overextended from it upper Keltner band strongly suggests the move is exhausted over the near-term. Therefor we expect prices to retrace or consolidate before gold eventually breaks to new highs.

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