Hawaii Six O - Gary Wagner
Brexit Deal and Turkey-Syria Truce Limits Gains in Gold
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A combination of geopolitical events has dampened earlier gains in gold futures. The precious yellow metal traded to a high of $1501 per ounce before softening on the close. As of 4:10 PM EDT gold futures are currently trading up $1.50 on the day and fixed at $1495.60.
Today Turkey agreed to stop its military action in Syria for the next five days which would allow the opposing Kurdish forces to withdraw to a “safe zone”, this according to Reuters.
“The truce was announced by U.S. Vice President Mike Pence after talks in Ankara with Turkey’s President Tayyip Erdogan, and was swiftly hailed by President Donald Trump, who said it would save “millions of lives”. But if implemented it would achieve all the main objectives Turkey announced when it launched the assault eight days ago: control of a strip of Syria more than 30 km (20 miles) deep, with the Kurdish YPG militia, formerly close U.S. allies, obliged to pull out.”
Today Boris Johnson in Brussels announced that “This is a great deal for our country - the U.K. - and our friends in the E.U.”
The Washington Post reported that the United Kingdom and the European Union have approved a new Brexit deal, setting up potentially close vote in U.K. Parliament.
“Against the tough odds, Boris Johnson hammered out a last-minute compromise Brexit deal with his skeptical, fatigued European counterparts on Thursday, raising the prospect that Britain could finally be out of the European Union by the end of the month.”
The occurrence of these two geopolitical events helped move U.S. equities higher, and also dampened earlier gains in gold pricing. Gold traded to a low of $1487 in early trading and then rallied to its high of $1501.10, before softening towards the close of trading in New York.
On a technical basis we have identified a compression triangle is the overall characteristic of recent price changes in gold. Noteworthy is the fact that we have seen a series of lower highs, as well as a series of higher lows. After reaching the highest trading value this year at the beginning of September gold softened from $1564 per ounce, to a low of $1465 at the beginning of October. Four of the last five trading days have resulted in the daily lows resting on the lower support line which defines current support. Typically, in this type of pattern energy builds until prices reach the apex of the triangle and then break to the prevalent trend direction, which in the case of gold has been bullish. We believe that this is how this current pattern will unfold.
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Wishing you as always, good trading,