Senior Trader Daily Update 26 September 2017

Good morning everyone.
 
Event risk came to the fore again on Monday to cast off the weight of last week’s bearish FOMC policy statement on precious metals values and to launch gold, silver and platinum significantly higher overnight. The event risk came in the form of comments from North Korea’s foreign minister at an impromptu press conference in New York.
 
In a continuation of the verbal sparring that has transpired between North Korea and the US Administration since President Trump’s bellicose speech at the UN last week, Foreign Minister Ri Yong Ho stated that “The UN Charter acknowledges member states’ right of self-defence. As the United States has declared a war, even though its strategic bombers don’t cross our border, we will come to own all rights to respond for self-defence including shooting down its planes at any time." "All options are on the table for North Korean response." "The whole world should clearly remember it was the US who first declared war on our country."
 
Consequently the US dollar was clubbed lower especially against the JPY (as were US equities) and precious metals were the beneficiary of the risk off / safe haven trade.
 
Overnight events have resulted in a ‘bullish engulfing’ / reversal candlestick being posted on the XAU/AUD Daily chart and whilst it would be prudent to wait for confirmation over the next few sessions, the potential ‘bear trap’ flagged at the end of last week appears to have been sprung.
 
Likewise, overnight events have led to a ‘bullish engulfing’ / reversal candlestick being posted on the XAU/USD Daily chart but it might take a few more sessions to have this confirmed. This week’s option expiration (both exchange traded and over the counter) still has a role to play with the USD 1300 strike, pivotal.
 
Good luck.
 
Regards,
Andre