US Trade Deficit Widened... USD Positive?

The much anticipated US Trade Balance which printed slightly better then expected at $63.8b vs. $64.9b, gave a sleepy market a quick jolt. The deviation from expectations was caused by a record amount of exports from US companies which offset imported higher energy costs. Traders were quick to view this figure as USD positive, buying the greenback against the majors across the board. Within this volatile figure, USD bulls see demand abroad offsetting slowing economic growth at home. However, in the end we still have a US burdened with a massive twin deficit which today’s -$63.8 shortfall just increased. Eventually the US and speculators will have to come it terms with this structural imbalance. How the heck traders interpret this as a dollar positive? Seems that traders have run out of reasons to support the greenback, with even higher deficit but better than consensus they are interpreting as positive USD. Can't wait till TIC data is release... then hopefully by then traders will see again that LOW TIC (Foreign Investment) again be interpreted as bullish USD. The the market will move purely based on bias, not interest rates or growth issue any longer.

I've not taken any trades for my live or demo account without much movements today and I wasn't in front of my pc to keep things up to date for me so I forbid myself to make any new trades.

However, for gold prices I've recently made a new analysis and this time I'm pretty confident on it. For the past few days (including last week), USD has been pretty strong with expectations from higher interest rates and political instabilities. Risk-averse traders naturally opted for the 'strongest' currency in the world, the greenback. Major crosses against the greenback dropped, particularly EUR/USD. But when the North Korea, political instability occurred, gold prices took immediate reaction before the greenback, although the price later returned to the lower state of the day as investors are shifting their funds to the greenback in case of war between Korea and the US. It was then risked-out that the possibility of war which then AGAIN the funds were moved back into gold, supporting the price. Therefore, the gold prices has regain strength and probably from the hardcore-gold investors that previously pushed XAU/USD to $726.00 level. I've read the hourly priced movements and noticed that XAU/USD has a supporting strength against the greenback for the past few times during economic data releases and today with US Trade Balance which was interpreted as USD positive. It hardly budge the dollar and it still maintained a positive value for the commodities.

From the current situation is analysed, US can't afford even 1 single worst than expected infaltionary data that could possibly diminish the expectations from inflation-traders. For every single bad USD data is released, XAU/USD (Gold) will gain to higher grounds possibly reaching the year-high at $725. Which will then I believe another profit taking session will be done and gold retracement back to 690-700 range. EUR/USD will certainly benefit from the poor USD data but the power to sustain the prices if fairly weak compared to NZD/USD and AUD/USD due to the country's strong gold production supporting the economy. It's been under my observation too that NZD/USD was influenced by the strong dollar quite a lot last week, but the retracement back up is extremely swift and I'm amazed for the first time the correlation between gold and New Zealand Dollar.

Gold would be the perfect investment for the time being for risk-takers. But do trade with caution and buy at preferably good prices between $630-$640 range is still acceptable.