Gold News: Worries of Trade War Spike Gold Prices

Gold News

In the latest gold news: As of March 26 at approximately 10:11am EST, gold was trading at $1353.55 per ounce, increasingly significantly since last week. At approximately this time last week, gold was trading at $1316.02 per ounce.

gold news

This week sees gold at a much higher price point, jumping from close to $1310 around a week ago and continuing a strong upward trend in the last week. This is following the Federal Reserve’s Open Market Committee meeting (FOMC) with new Chairman Jerome Powell. Gold closed the market last week at a much higher upwards rate than earlier in the week. This is a five-week high for gold following the threat of a trade war between US and China, which has weighed on the dollar and equity markets, pushing investors to search for safety in safe-haven assets. This also follows President Trump’s signing of a memorandum last week which has the potential to impose tariffs on up to $60 billion of Chinese goods. On the other hand, China has declared plans to levy additional duties on up to $3 billion of US imports in response to US tariffs on steel and aluminum. Stephen Innes, APAC trading head at OANDA, stated “It’s hard not to stay long gold with geopolitical risk now registering in the danger zone as an escalation of a trade war and John Bolton’s appointment unambiguously raised short-term market risks to a whole new level”.

In more detail, last week’s events can be recapped in the following manner. On the 21st of March, the Federal Reserve raised rates for the sixth time since the rate hike in December 2015. This was generally expected by the market and put the benchmark funds rate at a target of 1.5 percent to 1.75 percent. Furthermore, the Fed also upgraded its economic forecast and hinted at the possibility that rate hikes could be more aggressive moving forward in the rest of the year. The market is currently expecting 3 hikes for 2018, although traders were pricing in a 38% chance of four rate hikes. In addition, Fed officials raised their forecast for 2018 GDP growth from 2.5 percent in December to 2.7 percent, and increased the 2019 expectation from 2.1 percent to 2.4 percent. On the other hand, inflation expectations have hardly changed and the forecast for 2018 remains just 1.9 percent for both core and headline inflation. On the whole, the prospect of a more gradual normalization path from the central bank has alleviated the recent downward pressure with increasing concerns over the global trade war possibility stoking demand for gold as a safe-haven investment.

This sentiment has caused the bullion to remain fairly volatile for the year. In the 14-day gold prediction ending January 02, I Know First’s algorithm based on a stock prediction algorithm showed an impressive 100% accuracy rate, as seen in “Gold Forecast Based on Algorithmic Trading: Returns up to 4.53% in 14 Days.” After a fortnight, I Know First’s average percent change came out to 4.53% with GLD as the top earner, bringing in an impressive 4.53% return to investors.

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