As the trade war between the U.S. and China escalates, all eyes are on how the economy will respond, and one expert said that gold will come out as a beneficiary.
Gary Wagner, editor of TheGoldForecast.com, said that as the U.S. prepares to enact 25% tariffs on $200 billion worth of Chinese goods, gold could rally in the long-term due to the tariff’ inflationary impacts.
“You have to look at what the tariffs will do in terms of consumer prices down the road. These tariffs are put onto the companies that are using those imports. However, they’re going to pass the additional costs back to the consumer,” Wagner told Kitco News. “So that means that the American consumer is going to be paying more, that would be inflationary, it would also set into motion the potential for a...
Published on Mar 24, 2019
Gold should benefit on the back of weakening equities, and should the next resistance level be broken, $1,374 an ounce should be the next target, this according to Gary Wagner, editor of TheGoldForecast.com. “My current target is $1,374 [an ounce] and that is based upon a Fibonacci extension of the last rally,” Wagner told Kitco News.
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Gold has a hit a “critical” area of $1,178 an ounce due to technical factors, said Gary Wagner, editor of TheGoldForecast.com.
“If it breaks below that, I think it will go to $1,124, and if it holds in this area, our next resistance point is going to be back at $1,200,” Wagner told Kitco News.
Wagner noted that gold is not yet at a bottom and its direction from this current critical level is mainly dependent on the strength of the dollar. Importantly, gold’s relationship to the dollar is most sensitive on the yellow metal’s downside.
“If the dollar begins to weaken, we will see gold recover, but it’s not going to be the other way around,” he said.
Gold has not been acting like a proper safe haven due to the fact that a full-blown trade war has not yet been triggered, but this may change once tariffs are implemented, said Gary Wagner, editor of theGoldForecast.com.
“We are in a trade dispute, we haven’t morphed into a full-blown trade war. Once tariffs are actually imposed, that will be a different story, and we might see some fireworks at that point,” Wagner told Kitco News.
Wagner noted that should gold fall below $1,240 an ounce, a level $30 lower should be expected.
Kitco News is the world’s #1 source of metals market information. Our videos feature interviews with prominent industry figures to bring you market-affecting insights, with the goal of helping people make informed investment decisions.