Tariffs, trade war, and gold

Lots of drama lately with the China Trade war, and today Trump is adding Mexico to the pile:
-Trump says U.S. will begin raising tariff beyond 5% on July 1 and will continue until reaching 25% on Oct. 1 -statement
-The United States will impose a 5% Tariff on all goods coming into our Country from Mexico

My crystal ball doesn't really see any relief to this in the near term. If we break through this resistance Imma start loading up.

Although on the other hand the channel is pretty strong in 2019. I wouldn't be surprised if it is respected. Either way it's gonna make a decision soon. Weekly:

Woke up this morning to see we broke the channel, so I bought. The 200 dma is on the way up too which gives me a little confidence in it.
Quick edit: I usually hold onto my positions for a days to weeks, so I wasn't too concerned about the entry.

RJO's Pavilonis: Weak Equities Mean Boost For Gold Prices

Lots of bullish news from multiple banks and guys that have college degrees who know more than I do. (tarriffs, stocks, interest rates, trump)

There's a lot going on right now that could send gold in either direction. You know what's interesting? GLD set it's cyclical low for implied volatility just 6 weeks ago.



I need to get long volatility here. A July strangle would be beautiful, enough time for the situation with Mexico to reach some sort of resolution and after Trump and Xi meet (or don't meet) at the G20.

Tp hit:

Hello Perma-Bull. I use order flow/Volume analysis on gold and was very lucky to get into a good position (long) near the bottom of the last pull back. I don't see any signs (as of yet) of buying slow down. In fact what I see here is that most of the sellers have stopped out after making two unsuccessful attempts to push through the recent low. My current (aggregate) position is up about 350 pips so far...

I am expecting more stop outs in the 1320 area...assuming we make it that far.

Very nice. Are you getting out soon?

Unfortunately I stuck to my original profit target at 1308 and have been kicking myself in the ass since:

$1325 looks like it'll provide some pretty significant resistance.... That could be a good exit point. Not sure if I have the cahones to short it though.

I'm still holding and looking for new highs. That being said, order flow is registering weak buying at today's highs which may tell me that this late in the day, those who tried to short the day are stopping out. As well there may be a few buy stops (new longs) that were triggered at the weekly high from 10 weeks ago (1324.54). I'm not seeing any buying exhaustion however (at least not on the daily chart). I suspect that price may pull back and fill in the areas where sellers tried to dominate the order flow but then stopped out.

Considering that this move is mostly politically motivated I completely understand that price may move lower again, if the politics change (which happens just as soon as Trump scratches his nose). However, I think that enough short selling has stopped out that new selling will still be a bit "gun-shy" considering the last low was a higher low (looking at the weekly time frame). I am looking for 1350 or more to start scaling out.

Yeah, all (smart) countries seemed to pile up gold for "some reason"..
https://markets.businessinsider.com/...8947#5-russia6
https://en.wikipedia.org/wiki/Gold_reserve

Switzerland sold a lot of it, to keep the CHF down in the not so distant past..https://www.bullionstar.com/gold-uni...bank#heading-5

Also countries seemed to want to DRIVE gold back home.. The one that they have kept in another country.

All this drives the GOLD prices (UP), but we must not forget the other important component (strength) of USD dollar...
Today it went DOWNa little, GOLD rose... We must keep an eye on that correlation and also watch the COUNTRIES gold inventory change...
which can be a sign of many things and an important price mover as well...

This rally in gold was started after last week's US GDP data. But I think the biggest driver has been the Mexican tariff news and ongoing related drama. Take a look at this rally since Friday:

Quoting myself from the XAU/USD & XAG/USD - Gold & Silver Traders Thread

"Some have been arguing with all the trade tension and market uncertainty that money is flowing into the safe haven. I do not see it that way. Gold has been slumping for 3 months. The last 2 days have been the most upward momentum of over 3% since December 2018 and December 2017 before that, see a trend there?

Personally I think this move is a mix of Short sellers cashing in as well as some position taking. The news of Tariffs with Mexico, the Chinese puffing their chests about fighting with the USA as well as higher tensions with Iran are all making some traders skidish about equities and placing some funds into Gold."

- Ric

DING DING DING DING!

And it's about to keep weakening: St. Louis Fed's Bullard: interest rate cut may be "warranted soon" on trade, inflation risks

My man!

I couldn't agree more with the above comments!! Each of you have touched on a very important and fundamental reasons why Gold "should" continue higher. I might add that each of these things mentioned have all occurred within the last week to 10 days. I would dare say the market participants are getting tired of all the back and fourth. Trade tensions, currency strength (or lack thereof), political tensions (also driving trade tensions), and have decided that now is a good time to "set and forget" at least a portion of portfolios...just in case.

The US bond market is signaling caution ahead, making a strong case for buying gold.

In the image below (from FRED), the 10-yr yield is falling deeper in the negative against the 3-month. Last two times the 10-yr and 3-month were inverted were prior to the last two recessions.

Prediction alert:

We range around this level until there's more tariff or trade war news, specifically from the commander in tweet. I think that's all that matters now. Powell will probably talk down the dollar tomorrow morning, but that's about it.

As soon as trump escalates with either china and/or mexico about tariffs and trade, we'll continue this. If there's some relief, then it's bearish. I'm inclined to believe there will be escalation before anything else happens.

End of prediction.

There's been a lot of debate lately about whether or not the 3m-10y inversion really qualifies as a recession signal. You're absolutely right that the 3m-10y curve inverts before a recession, but so does the 2y-10y. The 2y-10y still isn't inverted:



Which one is right? It's difficult to say...

There's a theory that an inverted yield curve doesn't just signal a recession, it's the cause of them. Banks borrow short-term and lend long-term so when the curve inverts it discourages lending. I've read that the rate banks borrow at is more in line with the 2yr so I give that a little more weight between the two. If that's the case there's no recession signal, but either way its evident the US is late cycle.

is evans is giving us a powell-preview?:https://www.metalsmine.com/news/9213...-getting-close
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