Safe-Haven Demand Returns
Gold prices are continuing to push higher today with the futures market now up almost 5% on the week. Safe-haven demand has returned in full force against a backdrop of continued uncertainty around Trump’s trade policies. Despite positive soundbites on US/China trade, the market is yet to receive details of any concrete progress and the rally in gold suggests caution is returning following the optimism we saw last week. News of Trump’s 100% tariffs on movies produced outside of the US, announced this weekend, shows that the trade war is far from over and serves as further evidence of Trump’s unpredictable strategy. Unless traders hear anything meaningful on US/China trade this week, such as negotiations beginning or the walking back of some tariffs, gold looks likely to continue higher near-term.
FOMC in Focus
Looking ahead this week, focus will also be on the FOMC tomorrow. The Fed is widely expected to keep rates on hold though expectations are mixed when it comes to forward guidance. Market pricing has shifted recently with the CME group no longer pricing in a rate cut in June. Fears over the inflationary impact of Trump’s trade war seem to be overtaking recent data weakness. Additionally, with jobs growth remaining strong last month (177k vs 134k expected) it seems that traders have pushed back easing expectations. If the Fed takes a more hawkish tone at the meeting (extended pauses rather than upcoming hike) this might work in gold’s favour for now, exacerbating investor uncertainty and driving safe haven demand higher.
Technical Views
Gold
The correction in gold found strong support into a retest of the 3,254.65 level and broken bull channel highs with price now turning higher again. With momentum studies pushing up, focus is on a return to YTD highs at 3,493.81 next and a fresh breakout beyond.
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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.