Gold soon at the crossroads

18/04/2018 – 17:00 am: The dollar is weakening, a traditionally good environment for the gold price, which tends to develop more positively in times of dollar weakness. In addition to the verbal attacks and tweets of the US president – who is trying to weaken the dollar – the escalating trade war between the USA and China is also helping to make gold appear to be back in fashion. In terms of charting, the gold price is trending towards its highs in 2016 and 2017 – roughly be located in the price range between 1,360 and 1,375 USD. A break from this important resistance could push the gold price above the 1,400 USD mark again. But history shows that for such an important outbreaks the market needs a fundamental catalyst.

Much will depend on the further course of US monetary policy. More than half of the members of the US Fed’s monetary policy committee expects four rate hikes in 2018, which in turn could support the dollar, which appears to be oversold in the medium to long term if you look at the Dollar-Index. In addition, inflation figures from the UK and the EU were recently reported below expectations and are at least not depressing the real interest rate (nominal interest rate minus inflation rate). At least for now it looks as if the focus of the gold bulls is pointed too much on the tweets of the US-President than on the hard facts of monetary policy.

 

 

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