Gold to $1488 on escalating US-Sino tensions?

Fiona Cincotta August 5, 2019 6:59 AM

Gold hits multi year high as US-Sino tensions rise

Gold is up over 1.1% in early trade on Monday and has climbed to fresh multi year highs around $1460.

Gold has rallied hard since the FOMC rate cut announcement last week, gaining over 3%. Whilst the Fed’s hawkish cut initially pulled gold lower, increased US – Sino tensions have since offered support. 

Today’s extension of last week’s gains comes amid increased flows into safe havens as trade tensions between US & China escalate, driving risk off sentiment.

Last week President Trump increased pressure on China by adding tariffs of 10% on $300 billion worth of Chinese imports, in addition to the existing 25% tariffs on $250 billion.

China retaliated overnight by weakening the yuan to just above 7 vs the dollar. This will have the effect of counteracting the tariffs and is a warning shot that the trade war could become a currency war. This will no doubt be a move that infuriates the US.

Gold levels to watch:
The daily gold chart shows the bulls are firmly in control. Gold trades above its 50, 100 and 200 sma, and is not yet in overbought territory on the RSI. Gold has pushed through $1453 a six year high in early trade. A close above this level could see the yellow metal push on towards $1488, opening the doors to $1550. On the downside support can be seen in the region of $1438 prior to $1400.


TAGS:

Related Articles

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.