Senior Trader Update 13/04/2017

Good morning everyone,
 
Whether he’s raining down Tomahawk Cruise missiles on airfields in Syria or slapping the US Dollar down with comments to the WSJ that he prefers a weak US Dollar and low interest rates, President Trump’s pirouettes on previously stated beliefs and promises would do a prima ballerina proud and have proved a boon for gold investors.
 
Prices remained buoyant during yesterday’s Far Eastern session with investors piling on and “buying the strength”. GOLD/AUD consolidated within a $1697 - $1706 band throughout the day and into European trading prior to President Trump’s Dollar comments which we will expand upon momentarily.
 
On the geopolitical front, US Secretary of State did meet with Russian Federation President Putin (contrary to previous indications) for a shade under 2 hours but no contents of their meeting were divulged.
 
At the UN, Russia exercised its veto over a resolution to condemn Syria over the use of chemical weapons on civilians allegedly by the Syrian government. Russia insisted on the requirement for a full and open investigation into the incident prior to the apportioning of any blame. Needless to say, relations between Russia and the US and its allies remain at their lowest level in decades.
 
The key driver of gold prices overnight however were the aforementioned comments from President Trump regarding the world’s reserve currency and his abandonment of his stated intention to label China a “currency manipulator”.
 
In an interview with the WSJ the US President backtracked on his strong-dollar policy stating that the "US dollar is getting too strong", that the "strong dollar will ultimately hurt the US' and that he prefers a low interest rate policy.
 
From Dow Jones:
 
TRUMP SAYS IN WSJ INTERVIEW STRONG DOLLAR 'WILL HURT ULTIMATELY' THE U.S., MAKES IT VERY HARD TO COMPETE
PRESIDENT TRUMP: U.S. DOLLAR 'IS GETTING TOO STRONG'
TRUMP SAYS HE PREFERS LOW INTEREST RATE POLICY
TRUMP SAYS WON’T LABEL CHINA CURRENCY MANIPULATOR: WSJ
 
The President was quoted as saying in relation to US Federal Reserve Chairman Yellen that: “I do like a low-interest rate policy, I must be honest with you,” “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting—that will hurt ultimately,” “Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good.” “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”
 
The result of this was the US dollar dropping sharply and bolstering gold values as Mr Trump abandoned his intention to label China a currency manipulator and engaged in some currency manipulation of his own.
 
The reason given for the President’s change of heart regarding China and currency manipulation was that China hasn’t been manipulating its currency for months and to avoid undermining his talks with Beijing on confronting the threat posed by the rogue state of North Korea.
 
Technically, GOLD/AUD has posted two strong bullish candlesticks on Tuesday & Wednesday with closes near the top of the day’s low/high range and the market has also closed above the trendline resistance around the psychological AUD 1700 level that was flagged yesterday (see chart). Whilst some mean-reversion can be expected and would be desirable in terms of sustaining the rally, there is no technical resistance now on the chart until the AUD 1761.50 level posted on November 8th last year. In GOLD/USD terms however, major trendline resistance which commenced in July last year and comes in today at USD 1289 should be respected. A break of USD 1289 would likely spark more stop loss / stop-entry momentum driven buying.
 
Finally, bear in mind that today is the last trading day for the week with the UK out until next Tuesday but the US back on Monday and that this will have an impact on market liquidity.
 
Good luck and have a good Easter break.
 
Kind regards,
Andre