How is Gold Trading This Week?

Gold is currently trading at $1332.90 per ounce, up 0.42% or $5.10 for the day as at Friday, 10 February 2017. The spot price of bullion increased throughout the course of the day on Friday, raising prospects of a stronger upcoming week for gold. It is interesting to point out that the performance of gold over time has been erratic, particularly over the past 1 year. For example, the 1 year performance has shown slim appreciation of just under 4%, while the 6-month performance has been negative. Over the past 60 days, gold has rallied from around $1,160 per ounce to its current level, and over the past 30-day period, gains have been modest.

As a binary options trader, your goal is to read market movements and place call or put options accordingly. There are several events that will shape the gold price this coming week. For starters, gold’s recent bullish moves mark its strongest performance since November 2016. The general feeling among analysts is that the gold price will continue rising this week. Gold reacts to geopolitical uncertainty by rising in price. Every time President Trump issues warnings against regulators who disagree with him, this jeopardizes the stability of financial markets. Analysts will be carefully watching Trump’s Twitter account for announcements about judges who disagreed with his executive order on immigration, and opposition to his tax reform initiatives.

If Trump gets his way, will gold rise or fall?

Fortunately for Trump, there are now 3 vacant seats on the Fed board of governors. The surprise early retirement of Tarullo – an advocate of staunch regulation against banks – has paved the way for deregulation of the financial sector. This will invariably affect gold in a big way. Deregulation and lower taxation means that stocks will be a better prospect than safe-haven assets like gold. When companies can generate bigger profits, their growth prospects are better. However, a caveat is in order: Wall Street has been rising too quickly. The US economy is robust and performing well, but there is a degree of trepidation about how long this rally can lost. Let’s look at some of the current levels of major Wall Street indices, and gauge their performance over time:

• The Dow Jones Industrial Average is up 1.93% for the month, and 26.89% for 1 year. The current level of the Dow is 20,269.37.
• The Nasdaq Composite Index is up 2.87% for the month, and 32.20% for 1 year. The current level of the NASDAQ is 5734.13.
• The S&P 500 index is up 1.82% for the month, and 24.20% for 1 year. The current level of the S&P 500 index is 2316.10.

This is how to trade gold if taxes are cut and the dollar strengthens

A quick look at these figures is not a good sign for gold bugs. When a risk on approach is adopted to equities, capital these invariably shifted away from gold. Fortunately, everything that goes up is subject to profit-taking. When traders sell on Wall Street, and a 20% correction occurs, that money invariably finds its way into safe-haven assets like gold. The 100-day moving average for gold is hovering around $1229, and the 20-day moving average is significantly lower at $1215. If gold can hold above these levels, the bulls will win out.

For now, traders will want to be looking at economic announcements and policy decisions this week. Trump has been promoting tax cuts in a big way, and his precise wording for the nature of tax cuts is phenomenal. Such braggadocio will affect equities markets and by default, gold. Market participants wants Trump to shift his focus away from the asinine travel ban, and back to economics. Cutting taxes will resonate with a swath of voters – Democrats, libertarians and Republicans alike. If he moves in this direction, that will affect equities markets positively, and weigh heavily on gold. When the USD strengthens, demand for gold will weaken and put options will be the order of the day.