Gold has finally found its footing on what is an obvious slide in equities, and what could ignite into something much bigger than a tit for tat with China. Trump has fired what appears to be the first shots against China with a $60B tariff against all steel and aluminum products coming from China. They have retaliated in what looks like a restrained manner by imposing their own tariffs on $3B worth of US imports of fruit and wine. The much larger concern is that they have drawn a list of 128 products that are now potential targets of additional duties. Another reason we are seeing a flock to safe havens is that during the last FOMC meeting the fed indicated what could be construed as a dovish tone and brought the idea of more rate hikes than what was already expected to a halt. One last (and more recent as of this morning) reason to be bullish gold is that Trump has indicated he may veto a recent spending bill passed by the house that could potentially lead to a government shutdown!

The technicals of April gold look great for a bullish play. We saw an exact 50% retracement from the most recent low of 1242 back in mid-December, to the most recent high at the end of January at 1370. We now march toward the highs once again with 1360-1370 being strong resistance and 1300 being strong support and coinciding with the 200-day moving average. If this trade war is for real it could be just the beginning of a much larger upside move in gold.

Gold Apr ’18 Daily Chart