Gold Price Prediction – Prices Break Out on Mexican Tariff Announcement

Gold prices broke out on Friday, as news that President Trump announced surprise tariffs on Mexico. The news was a surprise withing the Trump administration as the US trade representative as well as the Secretary of the Treasury were not in favor of this move. Reporting shows that President Trump over the weekend in a visit to China was hardened by Steven Miller one of his advisors, and is issuing tariffs to stop immigration.

Technical Analysis

Gold prices broke out on Friday, pushing through trend line resistance and poised to test target resistance near the April highs at 1,310. Support on the yellow metal is seen near the recent trend line break out level near 1,296. Additional support is seen near the 50-day moving average at 1,287 and then the 10-day moving average at 1,283.

Medium term momentum has 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). Short term momentum has also turned positive. The fast stochastic generated a crossover buy signal in the middle of the neutral range which shows some accelerating positive momentum.

Treat of Mexican Tariffs Buoys Gold Prices

On Thursday evening, President Trump announced a new tarrif that will be levied on Mexico in an effort to get the countries attention to reduce immigration. Hard lining Steven Miller had President Trump’s ear during a trip to Japan which harded the Presidents stance. Trump said that he would introduce a 5% tariffs on all Mexican imports in response to the migrant inflows.  The tariffs will go into effect June 10 and will increase 5% on the first of every month to a 25% limit by October 1. There really is not a concrete way for Mexico to show they are trying to reduce immigration, and Trump has fallen in love with placing tariffs.