US/China Talks Faltering
Gold prices are starting to push higher again this week as uncertainty returns to the market over the breakdown in US/China trade negotiations. Following an absence of news over much of May, comments from the US treasury secretary last week signalling that talks had stalled have been met with a rise in safe-haven demand and a weakening in USD. Indeed, Trump was seen returning to a more hostile stance on China last week, accusing Beijing of breaching the terms of the 90-day agreement set out between the two countries at the start of May, to which China responded by accusing the US of the same.
Trump Tariffs
Alongside a harsher tone on China, Trump has also threatened to double the current tariffs on steel and aluminium imports to 50% as of June 4th. The threat comes amidst Trump’s ongoing legal battle with the US Court of International Trade after it ruled Trump’s tariffs to be illegal. Trump is currently appealing against the ruling with a final outcome yet to be determined.
Russia/Ukraine Fears
Finally, safe-haven demand is also being stoked through fears of a fresh escalation in violence between Russia and Ukraine following a huge drone strike against Russian airfleet. Traders are now fearful that Russia will pull out of upcoming peace-talks leading to greater uncertainty. Against this backdrop, gold prices look likely to continue higher near-term.
Technical Views
Gold
The rally in gold prices off the 3,254.65 level has seen the market breaking out above the bear channel from YTD highs. The move can be seen as a bull-flag break, putting focus on a return to YTD highs if price breaks above last week’s highs around the 3,364 level.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.