Gold was weaker overnight but then slumped further as details of the US-China tariff slashing emerged. Gold lost close to 3% early in the European session, crashing over $100 from its overnight high and coming close to hitting $3,200 per ounce.
Source: TN Trader
Investors rushed to dump gold on the basis that fears of a protracted US-China trade war were no longer warranted. The news came as a surprise. Certainly, few observers expected a significant agreement to be reached over the weekend. And the size of the 90-day tariff reduction was degrees larger than most could have anticipated.
So, the question now is whether investors will be as anxious to hold gold any longer as a hedge against economic and geopolitical uncertainty, or continue to unwind long exposure. Today’s sell-off suggests that gold’s best days may be behind it.
On the other hand, these big intra-day price swings are what investors should expect during a pullback after a long bull run. The ongoing sell-off is also helping to reset the previously overbought daily MACD.
This has turned sharply lower over the past three weeks, suggesting that momentum is to the downside. But if gold can find support, either at $3,200 or even $3,000, then this will give the MACD time to reset, and possibly provide the right environment for a push to fresh all-time highs.
