The situation with trade wars in the world is becoming increasingly dire. China is being forced deeper and deeper into retaliating with a vengeance and this is a bad sign for investors. We live in a globally integrated world. The world markets are over extended. This is known to investors who have been watching the quantitive easing programs of world central banks. Money which is printed goes to fund government debt and stock markets. Due to this overextension and trading on margin, which most funds partake in, the stock market has drawn up a shaky economic model.
Trade wars are not localized just between the two world superpowers China and the US, the Trump administration added tariffs to Mexican goods last week. The USMCA deal was almost done, but now North American traders have been thrown for a loop. We have heard on and off that Canada could fall prey to this as well in news headlines. Russia is sanctioned and continues to pop up in Mueller hearings over Trump ties with Russia. What country could be next? Is this aggressive foreign policy good for the US economy? Current market conditions show that the US stock market is taking a serious dive.
Currently President Donald Trump is in London negotiating with the next Prime Minister of Great Britain. He is giving his council that the next PM should be Nigel Farage and a No-Deal Brexit is the way to go. Perhaps he is trying to position the UK in such a way that trade negotiations would be better for the US in the future? Europe has gone tit for tat with the Boeing and Airbus situation, German automakers could be next. Everything about todays market is screaming risk aversion.
XAUUSD – Gold
Thank goodness we are traders. If you have a brokerage account and you are in control of your finances than you are in luck. You can invest in safe have assets. The asset we will be looking at today is gold. If you are just arriving at the party you have missed the initial move. Don’t worry a new opportunity will arise. Gold is a fantastic store of value and to trade it without having the extra risk of carrying actual physical gold is lucrative in a situation where investors are making a run for their money.
Gold has shot up through previous points of resistance, breakout out of 1300, 1310 and staying above 1320. Our recommendation is to wait until the price of gold falls to 1310 to open a long position or for the patient trader to buy from the level of 1300. If price falls below 1273 this constitutes a change of trend and the position should be liquidated.