Gold could be heading towards $1,600 on U.S.-China tensions: FXTM
Gold reaching fresh six-year highs overnight is a sign that it could be ready to hit $1,600 soon, according to FXTM. “Gold … benefited from the escalated tensions hitting a new 6-year high and seems to be heading towards $1,600,” writes FXTM chief market strategist Hussein Sayed. The new trigger for gold came on Friday when markets shifted their attention to the U.S.-China trade war as both countries hit each other with new tariffs. “The reaction from the financial markets was a steep selloff in equities with S&P 500 shedding 2.6% as investors flew to the safety of Treasury Bonds. The VIX index which often reflects fear in the market soared 20% to trade above 20,” says Sayed. It is important to recognize the difference between words and actions when it comes to this trade war, highlights Sayed. “Despite President Trump’s tweets reflecting positive discussions between the two countries, actions show the opposite. It now seems to many market participants that negotiations may get out of control, and likely lead to steeper selloff in risk assets,” he adds.