Gold inched higher on Tuesday, increasing the price of yellow metal to more than $1250.00 an ounce ahead of the President Trump’s speech. The technical bias remains bullish because of a higher low in the recent downside move.
Technical Analysis
As of this writing, the precious metal is being traded near $1253 an ounce. A support may be noted around $1245, the trendline support area as marked with pink color in the given below daily chart. A break and daily closing below the $1245 support shall incite renewed selling interest, opening door for a move towards $1180, the low of 27th January.
On the upside, the precious metal is likely to face a hurdle near $1260, an immediate resistance ahead of $1278, the upper trendline resistance area as demonstrated with red color in the above chart. The technical bias shall remain bullish as long as the $1180 support area is intact.
President Trump’s Speech
Trump’s Speech Starts at 2:00 a.m. GMT. The US President is scheduled to speak at a joint session of the U.S. Congress on Tuesday, where investors hope for more details on the administration’s plans for tax reform, monetary policy and deregulation. We expect high volatility in the gold price amid Trump’s speech.
How Gold Reacted in Past on Trump Speeches
Gold rallied after the Donald Trump’s press conference last month. Before the press conference started, the US dollar was trading higher. However, after that, it receded giving a short boost to the precious metal. Investors kept looking for specific details about fiscal policies and tax reforms, but Trump didn’t address them. Instead, he focused on bashing China and Mexico. The incomplete and complicated nature of the information Trump provided raised concerns and pulled gold higher.
We saw a similar rally in gold after Donald Trump became the new President of America last year. The rally was however short-lived and the precious metal plunged sharply in next couple of days amid Trump’s stance on tax reforms and monetary policy.
How to Trade Gold after Trump’s Speech
It is recommended to buy call options in gold if the President avoids hinting at any major tax reforms or change in monetary policy stance.
Alternatively, buying put options may be a good strategy if the president signals tax reforms or change in the country’s monetary policy stance.
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