Senior Trader Daily Update 27 September 2017

Good morning everyone.
 
Gold and silver retreated on Tuesday particularly in US Dollar terms. Profit taking into the North Korean geopolitical news-triggered rally hit the metals as Europe arrived. Additionally, US Federal Reserve Chairman Janet Yellen wrested back the news cycle from North Korea by delivering a speech on “Inflation, Uncertainty, and Monetary Policy” before the National Association of Business Economists in Cleveland which was perceived as hawkish (and thus bearish for precious metals values) by the markets, even though the Fed Chairman kept all policy options open.
 
The Fed Chairman reasserted that it was appropriate to continue pursuing a gradual tightening of monetary policy in spite of persistent weakness in inflation. She did however add that “My colleagues and I may have misjudged the strength of the labour market, the degree to which longer-run inflation expectations are consistent with our inflation objective, or even the fundamental forces driving inflation.” Furthermore, she went on to note that a course correction could emerge to “a policy path that is somewhat easier than that now anticipated.”
 
As noted yesterday, a ‘bullish engulfing’ / reversal candlestick was posted on the XAU/AUD Daily chart on Monday but prudence dictated waiting for confirmation over the next few sessions and this was borne out by Tuesday’s price action which pared 50% of Monday’s ascent. Likewise, the ‘bullish engulfing’ / reversal candlestick posted on the XAU/USD Daily chart on Monday was entirely reversed by Tuesday’s price action, vindicating taking the ‘wait and see’ approach.
 
The USD 1300 strike has remained pivotal ahead of the rapidly approaching option expiration (both exchange traded and over the counter).
 
Good luck.
 
Kind regards,
Andre