Gold prices moved higher on Monday but close off session highs. Prices were buoyed as the Euro initially generated gains following the stronger than expected German trade surplus. Solid exports busted the Euro which paved the way for higher gold prices. This comes despite Friday’s stronger than expected payrolls report, which saw U.S. yields drop weighing on the dollar.
Gold prices bounced near support at the 10-day moving average at 1,253. Resistance on the yellow metal is seen near the 50-day moving average at 1,287. Momentum on gold prices has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line).
Germany posted a trade surplus
Germany posted a trade surplus of EUR 20.3 billion in May, up from EUR 19.0 billion in April, as exports jumped 1.8% month over month and import growth slowed to 0.7% month over month from 2.6% month over month. The uptick in exports ties in with stronger production and orders growth in May and confirms that the German recovery is not dead yet. Some will, however, warn that that the reliance on exports makes Germany particularly vulnerable to an escalation of the trade war, but also the fallout of a possible hard Brexit, although for now companies seem to be operation near capacity and are struggling with a shortage of skilled staff. Unadjusted data show an accumulated trade surplus of EUR 99.9 billion in the first five months of this year, little changed from the EUR 99.2 billion in the corresponding period last year. The current account surplus meanwhile widened to EUR 107.4 billion from EUR 98.7 billion.
U.S. May trade deficit narrowed
U.S. May trade deficit narrowed to -$43.1 billion from -$46.1 billion in April. Exports jumped 1.9% following the prior 0.3% increase, with imports 0.4% higher from -0.2% in April. The “real” deficit slipped to -$75.3 billion versus -$77.5 billion, with exports up 1.7% versus -0.1%, and imports up 0.2% from -0.4%. Excluding petroleum, the deficit was -$38.4 billion from -$41.2 billion. The deficit with China widened out to -$33.2 billion from -$28.0 billion. The deficit with Canada was -$1.5 billion from -$0.8 billion.