Gold has been on a roll since our last market update, with gold making record highs last night. The gold market has enjoyed a bullish move due to uncertainty over a potential U.S. trade war with Canada, Mexico and China, among other things. Over the weekend, the U.S. president announced tariffs on Canada, Mexico and China, to which Canada has responded. Over the weekend the Canadian dollar hit its lowest level, USDCAD reached 1.47919. Gold and silver initially fell at the open yesterday at 6 pm ET, I guess people went into cash positions as they tend to do when there is uncertainty, no one wants to be the last one out the door. Overnight, the yellow metal rallied and made record highs, with gold currently at $2,810.33 USD, the metal is shining on safe haven demand. As for silver, its ratio to gold is currently approaching 90:1, which historically means the metal is undervalued and poised to rise. With the looming risk of a trade war, silver is likely to continue to lag gold due to its industrial demand (which would be reduced if there is a slowdown in the U.S. economy due to a trade war). On today's economic tape, you have ISM Manufacturing PMI to be released at 10 am, and you have the Bostic Fed speaking at 12:30 pm ET and the Musalem Fed speaking at 6:30 pm ET.
From a trading standpoint, it is always difficult to pinpoint resistance levels when a market makes new highs, but we currently find support at $2,800 and resistance at the $2,812-$2,815 level in gold. A break below support in gold could lead us to test $2,785 and then the $2,760 level. Any tariff news, whether good or bad, will influence this market, so be on the lookout for news. As for silver, there is support at $31.00 and resistance at the $31.70 to $31.75 level. A break of support could lead us to test $30.60 and then the $30.35 level.
Josh Perez
Managing Director
Chief of Global Trading