Gold Breaks Out
Gold prices have broken out to fresh record highs today following a collapse in the US Dollar in response to growing trade war uncertainty and softer-than-forecast US inflation. On the data front, yesterday’s CPI releases saw weaker inflation readings across the board, causing Fed easing expectations to lift. The market is now increasingly pricing in the chance of a larger-than-.25% cut in June amidst a backdrop of heightened economic uncertainty. The escalating trade standoff between the US and China shows no signs of slowing down and looks to be taking the shine off the 90-day tariff pause announced this week for most US trading partners.
Trade Uncertainty & US Econ Fears
The rally in gold this week reflects strengthening safe haven inflows amidst a heavy decline in the US Dollar. US recession fears and Fed easing expectations are drawing capital away from USD which is tracking the move in treasuries lower. Against this backdrop, gold prices look likely to continue higher near-term. Uncertainty around the US trade war is expected to remain a key theme for markets and only a truce between the US and China (and a reversal of tariffs from both sides) is likely to cause a meaningful enough shift in the global outlook to cap the rally in gold. Furthermore, any incoming US data weakness should feed into recession fears, putting additional pressure on the greenback.
Technical Views
Gold
The rally in gold this week has seen the market breaking out above the 3,164.82 level to print fresh highs, now testing above the bull channel highs also. With momentum studies bullish and pushing higher, focus is on a continuation while price holds above the 3,039.97 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.