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Gold Traders Ride a Roller-Coaster of Price Fluctuations Today

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As of 4:11 PM EDT gold futures have maintained a price above $1,500 per ounce, with the December Comex contract currently at $1,506, a net gain of $2.80 on the day. However, it is not today’s net gain that got the attention of market participants, but rather the wild price swings that developed as fundamental events unfolded.

According to Reuters, the ECB released a statement following their meeting in Frankfurt today, It announced the following changes.

“1. The interest rate on the deposit facility will be decreased by 10 basis points to -0.50%.

2. Net purchases will be restarted under the Governing Council’s asset purchase programme (APP) at a monthly pace of €20 billion as from 1 November.

3. Reinvestments of the principal payments from maturing securities purchased under the APP will continue.

4. The modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III) will be changed to preserve favorable bank lending conditions, ensure the smooth transmission of monetary policy and further support the accommodative stance of monetary policy.

5. In order to support the bank-based transmission of monetary policy, a two-tier system for reserve remuneration will be introduced, in which part of banks’ holdings of excess liquidity will be exempt from the negative deposit facility rate.”

These policy changes sent gold futures prices sharply higher trading to an intraday high of $1532.20. This high was quickly challenged as a new statement from the United States was reported by Bloomberg News.

According to Bloomberg News, the “Trump administration officials have discussed offering a limited trade agreement to China that would delay and even roll back some U.S. tariffs for the first time in exchange for Chinese commitments on intellectual property and agricultural purchases, according to five people familiar with the matter.”

About an hour after Bloomberg’s report came out CNBC said that a senior White House official said the U.S. is “absolutely not” considering an interim trade deal with China.

Over the last 15 hours, as new events unfolded, we saw the market trade to a high of $1532, and then give up those gains as market traded back to 1507 by 5:01 PM EDT. The fact that gold was able to remain above $1500 per ounce is bullish, but very dampened by the selloff that occurred after reaching today’s high.

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Wishing you as always, good trading,

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