In my opinion, a new wave of gold depreciation is underway and this can be attributed mostly to recovery in US 10 year bond yields and headline inflation. As we saw yesterday, Q3 GDP expanded to 3.3% easily beating expectation at 3.0% while we saw consumption figures dwindling.
While that was being reported, investors are increasing their expenditure on business equipment. Data showed expenditure increased to 10.4% which by the way is a 3 year highs.
Other than these slew of economic data, politics will be center stage and Senators are supposed to vote on their version of Tax bill. Trump tweeted and expressed optimism that the bill shall be passed.
For that to happen, we expect GOP senators to unite and pass the bill despite the fierce oppositions from Democrats.
If this bill is passed without drama and data continues to show a recovery in the US economy, Gold shall continue to depreciate and that is why I recommend selling.
Technically, bears should be in charge now that there is a stochastic sell signal in the monthly chart. Gold prices are also oscillating within a wedge and it is likely that USD bulls might drive prices below the 20 period MA and the main support line in the coming months if sell pressure is maintained.
In our entry chart, you can trade Gold in two ways.
You can set a sell stop below current minor support trend line at around $1270 and take advantage of further Gold depreciation.
Alternatively, you can wait until a sell signal forms from the overbought stochastics of this commodity. Well, as you can see, today as been bearish with two bearish soldiers breaking below the first minor support trend line and the main support line at $1285.
The main trend is bearish so we only take short positions and trade as follows:
Sell Stop: $1270
Take Profit: $1250, ideal $1200 support at June’s lows
Sell Limit: $1285
Stop Loss: $1290
Take Profit: $1250, $1200
Have a good trading day.