Gold price responds strongly to Larry Kudlow – Risk On Trade

Yeah, yeah, yeah, yeah, yeah. Good old Larry Kudlow. The Trump consultant has often said positive things, which didn’t happen afterwards. Yesterday evening he told reporters (Markus Fugmann discussed this in the morning video earlier) that the trade deal with China was “close” (“it’s close, but not done yet”). Until today there is no deal. But the markets are once again responding to the news, and US futures are therefore trading higher overnight. The reality is that they can’t even agree on the amount of US agricultural products China should buy! Far from an agreement, we are also far from an agreement on the question of unwinding tariffs. But what does all this have to do with the price of Gold?

Gold price reacts negatively to Kudlow statements

Well, the stock markets have received a shot of optimism from Larry Kudlow (that does create wonders). The yield on ten-year US government bonds also rose slightly from 1.82% to 1.85%. And where risky assets such as equities become more attractive, gold becomes less attractive. Since Kudlow’s statements, the Gold price fell from 1,471 dollars to 1,464 Dollars tonight. This means that the beautiful recovery in Gold that has been underway since Tuesday is currently suspended for the time being. The following chart shows the Gold price over the last ten days. Yesterday alone there was a nice rise from 1,461 to up to 1,474 Dollars. But looking at the development of the last few days, the bottom formation is still intact.

Risk On

Remember, as we said, Kudlow’s optimism injections never lasted long. And the markets quickly returned to reality. Only yesterday we reported on China’s latest statements on the trade war, which are far less optimistic. But currently only the short-term Kudlow optimism counts. As we said, it doesn’t have to last long. So could stocks weaken again and the price of Gold rise again? At the moment, however, the risk-on-trade, i.e. the pull towards more risk, is running, which consequently entails a sale of Gold. The analyst community is currently discussing the Kudlow statements country by country. Here is an example of the very fresh statement by Milan Cutkovic of AxiTrader, quote:

So it only takes a few positive comments on the progress of the trade talks between the USA and China to improve the mood on the trading floor again. This time it was Trump’s economic advisor Larry Kudlow who expressed confidence that an agreement between the two economic powers would soon be concluded. The DAX is now likely to test the 13,300 mark again in the near future. A clear breakthrough should provide tailwind. Nothing would stand in the way of testing the all-time high just under 13,600 points from a chart technical point of view.

So, if you are basically optimistic for a further rise in the Gold price, you should not give up hope yet, thanks to the short half-life of Kudlow statements!

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