Price of Gold Fundamental Daily Forecast – Buying Frenzy Could Continue if Europe Responds to Tariffs Today

Gold futures are spiking higher shortly before the regular session opening on Friday, hitting their highest levels since February 20 amid worries over the escalation of a trade war between the U.S. and China.

At 0958 GMT, June Comex Gold futures are trading $1348.00, up $14.80 or +1.11%.

The price surge is being driven by a weaker U.S. Dollar and the aggressive shedding of risky assets as investors seek shelter in so-called safe-haven assets after U.S. President Trump initiated long-promised sanctions, or anti-China tariffs on Thursday in an effort to protect U.S. intellectual property. The aggressive action by Trump is without ramifications as China responded overnight with tariffs of their own, triggering the start of what could be a long-term trade war.

To recap the events from Thursday, Trump signed a presidential memorandum that could impose tariffs on up to $60 billion of imports from China, but only after a 30-day consultation period that starts once a list is published.

China then tried to soften the tone by urging the U.S. to “pull back from the brink”, while the Chinese commerce ministry unveiled plans to levy additional duties on up to $3 billion of U.S. imports in response to the recent U.S. tariffs on Chinese steel and aluminum.

Forecast

Heightened volatility is expected to be the theme on Friday as uncertainties surrounding the scale of a possible trade war between the United States and China are driving investors out of higher-risk investments and into safe-haven assets.

Over the short-run, investors are likely to sell stocks and buy gold as they sort out the details of the actions currently taking place. Essentially, the price action is being driven by a “sell now, ask questions later” mentality in the equities markets with money being moved into gold for protection.

The perception at this time is that a trade war will harm both the U.S. and Chinese economies. Any damage to the U.S. economy will hurt the U.S. Dollar, making dollar-denominated gold a more attractive investment.

Traders are anticipated a 200-point drop in Dow Jones Industrial Average on the opening today at 1330 GMT. The next move in gold will then be dictated by whether the stock market rout continues or if prices stabilize.

In the meantime, another shoe may drop as European Union leaders are awaiting for the final word from Trump on whether the United States would apply tariffs to European steel and aluminum. German Chancellor Angela Merkel warned of a firm response if he did. This action would likely trigger an acceleration to the downside in stocks while creating a buying frenzy in the gold market.