Gold firmed modestly on Wednesday, easing short-term pressure on the downside somewhat. The yellow metal climbed, despite the signing of the Phase One trade deal between the U.S. and China.
President Trump called the deal a "landmark agreement," but it strikes me as not much more than a cease-fire in the U.S.-Sino trade war. The deal includes enforcement mechanisms in case the Chinese don't live up to their end of the bargain and if that happens the trade war could escalate again.
The U.S. eased tariffs to 7.5% on about $120 billion in Chinese products, leaving $360 billion worth of exports from China fully tariffed. “We’re leaving tariffs on, but I will agree to take those tariffs off if we are able to do phase two,” said the President. There seems to be some uncertainty regarding when Phase Two talks will begin.
Also on Wednesday, the House transmitted articles of impeachment against President Trump to the Senate. The Senate trial is expected to commence next week. There is little chance that Mr. Trump will be found guilty in the Senate and removed from office.
U.S. PPI for December came in weaker than expected, much like CPI did on Tuesday. Soft inflation readings are going to keep the Fed leaning neutral to dovish, despite surging asset prices.
Friday's high in gold at 1563.13 corresponds pretty closely with the 38.2% retracement level of the decline off of last week's high. A breach of this level would further ease pressure on the downside, returning additional confidence to the underlying uptrend.
Silver has held the 20-day SMA on a close basis. I'd like to see the white level regain the 9-day SMA at 18.06 and then clear the 18.13 Fibonacci level (38.2% retracement level of the decline from last week's high) to suggest that a short term low is in place.
Palladium was up more than 3% today, its 18th consecutive daily gain. The new record high is 2260.00. The next objective is 2307.71.
Platinum surged above $1,000 for the first time in nearly 2-yrs, pressuring the January 2018 high at 1028.61. The next tier of resistance is 1043.83.
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