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Thanks to the US-China trade war, gold has shot right through my prediction level - NOW WHAT?

by , 12 August 2019
Thanks to the US-China trade war, gold has shot right through my prediction level - NOW WHAT?
The ongoing trade war between the US and China escalated last week when President Trump said they would initiate another 10% tariff hike on Chinese imports worth $300 billion effective 1 September 2019.

Since then, we have seen a huge drop - over 5% on the S&P500, Dow Jones, Yuan currency and even the JSE.

Investors are becoming really worried about global stability and it's driving them away from equity markets into gold.

 
In fact, in the last week we’ve seen a huge gold rally which has pierced right through my second prediction target at $1,414. If you missed the article, you can click here to catch up
 
The question is…. Now what?
 
Today I’ll be making my third prediction for the year so we can continue to profit during this gold rally.
 
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How the US-China trade wars have helped gold rally
 
Last week Monday, China allowed the Yuan to weaken passed R7 per U.S dollar for the first time in 10 years, which came after President Trump announced the further tariffs to be imposed.
 
Then ‘The People's Bank of China’ retaliated and hit back against the Trump administration by weakening their own currency, where the yuan dropped past the symbolic $7.00 price level for the first time in over 10 years. 
 
This move led to the US market’s biggest sell off of 2019. Despite the economic fears, weakening yuan’s currency and with the trade tensions, this has helped gold rally over 5% this month alone to test the $1,500 level for the first time since April 2013.
 
Senior currency strategist at DailyFX said in a recent note to clients, “Trade wars are the catalyst for the latest gains,”.
 
And chief market strategist at SunTrust Private Wealth also said "The longer the tariff uncertainty and escalation goes on, the greater the risk of something bad happening,".
 
And so, investors will continue to search for safe places to invest their money.
 
A trio of central banks have slashed their interest rates over night
 
It looks like with the Fed having cut their interest rates by 25 basis points for the first time in over a decade, other countries are now following suit.
 
In fact, across Asia Pacific both New Zealand, India and even Thailand decided to drop their interest rates by 50, 35 and 25 basis points to boost their economies.
 
When interest rates drop, investors take their money out of banks and interest bearing assets and move into equities, businesses and higher return investments.
 
And when it comes to gold, when the interest rates drop the cost of holding gold also goes down which encourages more investors to pile into these precious metals.
 
Here is my third prediction for gold for the year. Let’s make it a hat-trick.
  
My biggest prediction for gold yet

 
Looking at the weekly chart of gold, we can see, since 2016, it’s been forming a breakout pattern called an ascending triangle with a solid ceiling level at $1,400.
 
On 8 July 2019, it broke above this level, which enticed buying pressure. Since then the market has climbed over $1,000 dollar to R$1,500 per ounce.
 
Using the High-Low price calculation, we’ll be able to find where the next prediction price level will be for gold.
 
Target price = (High – Low) + High
                       = ($1,400 - $1,046) + $1,400
                       = $1,754
 
This means, for my third and biggest prediction, we can expect the gold price to hit $1,754 per ounce.
 
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Here are three ways you can profit from the next 16.93% gold rally
 
First we can look to buy stocks that move up when gold rallies like Anglo Gold, and Harmony.
 
Second, we can actually buy Gold CFDs and hold them until it reaches the target.
 
Third, we can indirectly short international stocks while investors flee from equities and deposit their money into safer havens like gold. Trader X is lining up these trades, as we speak.
 
Trade well,
 
“Wisdom yields Wealth”
Timon Rossolimos,
Analyst, Red Hot Storm Trader 
 
P.S: Did you know Trader X is on a winning streak of five trades in a row and his trading strategy is on fire! Make sure you don't miss the next winner. Read more here.


Thanks to the US-China trade war, gold has shot right through my prediction level - NOW WHAT?
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