Gold Price Prediction – Gold Rallies on Safe Haven Bid

Gold prices moved higher, whipsawing and then rising, following news that President Trump was threatening to increase tariffs on 4200-billion of Chinese goods. This comes as the market was expected a trade agreement to be announced immenently, and President Xi to visit the US for an official signing in June. The news buoyed safe haven assets, allowing gold prices to gain traction. Volatility also increased, as riskier assets declined.

Technical Analysis

Gold prices moved higher on Monday, rising above resistance which is now seen as support near the 10-day moving average at 1,278. Resistance is now seen near the 50-day moving average at 1,294. Short term momentum is positive as the fast stochastic generated a crossover buy signal. Medium term momentum has also turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram also generated a buy signal. The trajectory is moving higher which reflects accelerating positive momentum.

US-China Trade Talks Stall

A Chinese delegation is on its way to the US but the lead negotiator is not coming. Over the weekend, President Trump tweeted that unless China gives in to US demands quickly, the US would be forced to increase tariffs on $200 billion of imports from China from 10% to 25% this Friday.  This caught ther markets completely offsides, providing the back drop for a risk off trade and a rush to safe haven assets like gold. Trump also threatened to extend that 25% duty on another $325 billion of Chinese goods. Trump was apparently unhappy with the progress of the talks and wanted to attempt to move the ball forward with additional treats. It appears that China was backtracking on some items. These threats will likely derail any trade deal between the two nations, as China will not likely give in. This could generate signficant volatility if one of the two nations does not back down.