Gold to $1488 on escalating US-Sino tensions?

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.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.