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It's a game of chess

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(Kitco News) - Just when things were looking to stabilize for gold around the $1,500 an ounce mark, gold received an influx of energy and shot up higher midday Friday after China announced a round of retaliatory tariffs against U.S. products. 

In what’s playing out to be a game of chess, China announced it will place tariffs of 5% or 10% on U.S. imports starting on Sept. 1, according to a statement posted by China's Finance Ministry.

The Ministry also announced plans to resume tariffs on U.S. imports of cars and automobile parts. The tariffs would be 25% or 5%, and would take effect on December 15th. The new tariffs will target over 5,000 products, including soybeans, coffee, whiskey, seafood and crude oil. 

And then we have Jackson Hole…

Federal Reserve Chairman Jerome Powell came out saying the global economic outlook “has been deteriorating.” And he pledged yet again, to “act as appropriate to sustain the expansion,” a key phrase he has used before.

Kitco News’ in-house analyst Jim Wyckoff had this to say about this day with no shortage of news events, “Gold prices are scoring gains of over $24 an ounce …It appears the U.S.-China trade war has kicked into a higher gear after China announced new trade tariffs on the U.S., while President Trump retaliated in a series of threatening tweets that included one demand that U.S. businesses stop doing business with China.”

He added, “Trump also asked in a tweet who was the bigger enemy: China's President Xi or the Federal Reserve. All of this has unnerved the marketplace heading into the weekend. And all of this is bullish for safe-haven gold.”

December gold was last up $28.90 at $1,537.40.

And in the background of all this, we have that pesky yield curve inversion that has been rattling the markets, in which the 2-year Treasury note has surpassed the 10-year, a reliable recession indicator for the past 50 years. 

In Kitco’s week ahead report, Anna Golubova said most experts surveyed, would not be surprised to see gold hit $1,600 on the back of all this news. 

One expert said, "it looks like upside momentum is building and a breakout above that $1,540 [is possible]. If gold closes on the high and Trump has additional tweets over the weekend, we could really threaten a breakout above $1,540 on Sunday. At $1,540, anyone who got out will probably jump back in, anticipating another move up above $1,600." 

One thing is certain, there will be no shortage of fireworks, or possibly even a checkmate!

Speaking of fireworks, stay tuned to Kitco Video News next week when Shark Tank star Kevin O’Leary will be back in studio – you might remember the last time he was on, he didn’t mince any words when talking Justin Trudeau.

Have a great weekend!

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.