April gold bulls must be disappointed by the recent trade sessions this week. It appears that the market didn’t see enough follow through on the dovish fed stance and put more faith in the U.S. equity rally and a “risk on” attitude. There are still, plenty of reasons to be bullish the precious metal. The biggest potential factor for a gold rally, is the prospect of a “no-deal” with China. The meeting is supposed to be held at Trump’s Mar-A-Lago residence “sometime” in March. There was also the announcement that tariff increases were postponed “indefinitely” until a deal or no deal is announced. A surprise tariff bump or prospect of a no deal would surely be a positive for gold, and potentially put U.S. equities into a tailspin. Another positive for gold is the continued dovish fed, in the face of this strong stock market rally.
If inflation starts to tick up the fed will be in a position where a rate hike needs to be done, but as of now we are forecasting just 1 rate hike in December of this year. Technically, gold needs to stay above 1300 to have a chance at making back lost ground. I personally see gold having a struggle to get back to the highs, but a recovery is more likely than not given the extent of the selloff. An interesting point is that as I write this, a double bottom in the short term for April gold could have been formed. The Feb 14th low, and today’s low are quite close and could be argued that a move back toward 1330 is looking much better than a move beneath 1305.
Gold Apr ’19 Daily Chart