Precious Metals News Update 25 January 2018

Hello everyone.
 
Gold and silver ripped higher on Thursday as the US Dollar was given the baby seal treatment by investors after US Treasury Secretary Steven Mnuchin commented at the World Economic Forum in Davos that; "Obviously a weaker dollar is good for us as it relates to trade and opportunities,” - thereby departing from the widely followed public script by US officials that a strong Greenback is always desirable.
 
The brakes were also slammed on the Dow Jones Index’s untrammelled ascent to record highs, after US Commerce Secretary Wilbur Ross commented at the WEF that China's 2025 Technology Plan was a "direct threat" to the US, sparking fears of an escalation in the (perceived) trade war being waged by the US presently, as well as fears of increased protectionism from the world’s largest economy. Fears exacerbated by the freshly announced US tariffs on solar panels and washing machines less than 24 hours prior.
 
XAU/USD advanced beyond technically significant resistance at USD 1345 as the momentum-driven, breakout buying and shortcovering / stop-loss buying flagged in yesterday’s commentary was triggered. The September 8th high at USD 1358 was obtained and the strong bullish candlestick posted on the Daily chart now augurs well for further progress towards the July 2016 highs at USD 1375.00 (and potentially as far as the mid-March 2014 high at USD 1392).
 
The previous resistance at USD 1345.00 should now act as support on any pullbacks. Also worth bearing in mind are the words of Richard Donchian (widely regarded as the father of the Trend Following style of trading) that: “A move followed by a sideways range often precedes another move of almost equal extent in the same direction as the original move.  Generally, when the second move from the sideways range has run its course, a counter move approaching the sideways range may be expected”. The most recent upwards move in XAU/USD commenced at 1236.50 in early December last year before halting at USD 1345 and consolidating sideways…..
 
Another strong bullish candlestick was posted on the Daily Chart yesterday for XAU/AUD and a continuation of the advance towards resistance at the mid-Jan 2018 high at AUD 1695.00 (just beneath the psychological big-figure resistance at AUD 1700.00) seems probable - with the potential for the late November 2017 high at AUD 1715.00 to be tested also (the upper bound of an AUD 1615 – 1715 sideways trading band which has been in place since mid-August last year).
 
President Trump has availed himself of the opportunity to become the first US President in 18 years to attend and address the assorted “masters of the universe” gathered for the WEF at Davos.

Good luck and have a great (Australia Day) long weekend.
 
Regards,
Andre