With each passing day that Trump’s tariffs stay in place, we’re descending further into chaos. Japan was supposed to be the easiest of battles to win in this tariffs war but that’s looking like a crapshoot now. The early indications were there amid the difference in communication between Trump himself and the Japanese side. There really are no easy deals at this point.
At the same time, there’s the continued game of chicken between the US and China. The rest of the world is set to be the innocent bystander but also going to suffer from the consequences of the economic warfare.
Then, there’s the loss of confidence in the dollar alongside China’s response to weaponise the yuan. And so the longer this continues, the more gold stands to benefit as there isn’t any better alternative. Even Treasuries are no longer a safe haven as 30-year yields are shooting back up to 4.91%.
Other supportive factors are central banks continuing to stock up on the precious metal and ETF holdings still having some ways in catching up to prices at the moment.
Gold is up nearly 2% on the day again to $3,485 currently and looks extremely poised to touch $3,500 this week next.
Just like it is tough to pick a bottom in falling market, it is tough to pick a top in this situation for gold. Not least when so many factors are all running in sync to underpin the precious metal, all at once.
This article was written by Justin Low at www.forexlive.com.