Gold Spikes To A 6-Year High Above $1,550

Gold has picked up where it left off on Friday. The safe-haven metal has spiked $20 higher above $1,550 in early Asian trading. It is now near the top-end of the short-term trend channel and the RSI is overbought, but the fundamental drivers of the price advance appear to be accelerating.

Silver is also rallying strongly, up 30 cents to $17.70. This represents a gain of 1.7% vs. gold at 1.3%. The silver chart is also overbought and nearing the resistance trendline with the RSI above 70. But this breakout has a tremendous amount of volume behind it and past bull runs have seen silver become extremely overbought before correcting.

These are the highest prices for precious metals since early 2013! These gains are being driven by a number of factors including the intensifying trade wars, growing global debt, FED course reversal on interest rates, calls for more stimulus, Trump’s tweetstorm, geopolitical tensions, and an increasingly-fragile stock market. This morning we are also seeing a sharp drop in the U.S. dollar, which had been holding up rather well.

According to CNN, “The US-China trade war ratcheted up yet again on Friday, with Beijing unveiling a new round of retaliatory tariffs on about $75 billion worth of US goods. China will place additional tariffs of 5% or 10% on US imports starting on September 1st, according to a statement posted by China’s Finance Ministry. The Ministry also announced plans to resume tariffs on US imports of automobiles and automobile parts. The tariffs would be 25% for vehicles or 5% on parts and would take effect on December 15th. The new tariffs will target 5,078 products, including soybeans, coffee, whiskey, seafood, and crude oil.”

Fed Chair Chairman Powell recently said the global economic outlook “has been deteriorating” as he vowed to “act as appropriate to sustain the expansion”. This did little to soothe the nerves of investors, but it did send capital fleeing into safe-haven assets like gold.

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Disclaimer: I am not an investment advisor. This is just my personal opinion. Invest at your own risk.

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