Gold has been on a roll since our last market update, with gold hitting record highs last night. The gold market has enjoyed an upward trend due to uncertainty surrounding a potential US trade war with Canada, Mexico, and China, among other things. Over the weekend, the US president announced tariffs on Canada, Mexico, and China, to which Canada has responded. Over the weekend, the Canadian dollar hit its lowest level, with USDCAD reaching 1.47919. Gold and silver initially fell at yesterday's opening at 6 p.m. ET. I guess people moved into cash positions as they usually do when there is uncertainty; no one wants to be the last one out the door. Overnight, the yellow metal rebounded and hit all-time highs, with gold currently at $2,810.33. The metal is shining in safe-haven demand. As for silver, its ratio to gold is currently approaching 90:1, which historically means the metal is undervalued and poised to rise. With the looming risk of a trade war, silver may continue to lag behind gold due to its industrial demand (which would decline if there were a slowdown in the US economy due to a trade war). On today's economic calendar, you have the ISM Manufacturing PMI due out at 10 a.m., and you have Fed Bostic speaking at 12:30 p.m. ET and Fed Musalem speaking at 6:30 p.m. ET.
From a trading perspective, it is always difficult to pinpoint resistance levels when a market reaches new highs, but we currently find support at $2,800 and resistance at the $2,812-$2,815 level in gold. A break below support in gold could lead us to test $2,785 and then the $2,760 level. Any news on tariffs, whether good or bad, will influence this market, so it is recommended to keep an eye on the news. As for silver, there is support at $31.00 and resistance at the $31.70 to $31.75 level. A break below support could lead us to test $30.60 and then the $30.35 level.
Josh Perez
Managing Director
Chief of Global Trading