Gold Reacts to Geopolitical Tension on Two Fronts

April 11, 2017 - 5:35pm

 by Gary Wagner

In response to geopolitical tension on two fronts, gold is trading dramatically higher today. As of 3 o’clock Eastern Standard Time, gold futures (June contract) are trading $22 higher at 1276. This comes in response to statements made by the North Korean media, which have contributed to raising US-North Korea tensions. The second factor is the rising tension between the United States and Russia, as the United States Secretary of State Rex Tillerson meets with his counterpart in Russia.

Tillerson Plays Hardball and Draws a Line in the Sand

In his first visit as Secretary of State, Rex Tillerson arrived in Moscow today to meet with his diplomatic counterpart. Per the State Department, Tillerson warned that Russia, “must choose to side with the U.S. or the Assad regime, which he calls an "unreliable partner."

In a seven-minute statement today on C-SPAN, Tillerson went on to say, “It is also clear Russia has failed to uphold the agreements that have been entered into under multiple Security Council resolutions. These agreements stipulated Russia as a guarantor of a Syria free of chemical weapons, that they would also locate, secure, and destroy all such armaments in Syria.

Stockpiles in continued use demonstrate that Russia has failed on its responsibility to deliver on its 2013 commitment. It is unclear whether Russia failed to take this responsibility seriously, or Russia has been incompetent. But this distinction doesn’t much matter to the dead. We can’t let this happen again.”

Secretary of State Tillerson has entered his most complex meeting yet as he seeks to convince the Russians to choose the United States over the Assad regime. He has left little room for negotiation in his statement that, “Russia must choose to side with the US.”

North Korea Threatens Nuclear Strike on the United States

As reported by multiple news sources yesterday, a U.S. Navy strike group, led by the USS Carl Vinson aircraft carrier, was making its way toward the Korean Peninsula on Sunday. Today, North Korea responded through their state media by warning that they would respond with a nuclear attack on the United States at the first sign of American aggression.

As reported by Reuters, “North Korea's official Rodong Sinmun newspaper said the country was prepared to respond to any aggression by the United States.

Our revolutionary strong army is keenly watching every move by enemy elements with our nuclear sight focused on the U.S. invasionary bases not only in South Korea and the Pacific operation theater but also in the U.S. mainland."

The fact of the matter is that the geopolitical tension based on both political hotspots will not be resolved overnight, as both North Korea and Syria have acted in this manner for an extended period. Moreover, both China, regarding North Korea, and Russia, regarding Syria, have yet to offer solutions to resolve these crisis hotspots. Without their collective input into both conflicts, it is hard to imagine a peaceful resolution to either Syria or North Korea.

As such, we could continue to see gold, as a safe haven asset, rise in value. Based on our current studies, we now see technical support at 1264 and resistance at 1300. If gold continues this trajectory, our upside target is 1327.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

This Morning we sent out a trade alert:  Major breakout above resistance. June gold up 19 dollars at 1273. Buy gold at market (1273 current). Stop under 1260

Gold closed at 1276.50

Maintain long gold at 1273. Maintain Stop below 1260

 

Gold Market Forecast

As we spoke about in today's opening letter, the geopolitical hotspots that exist are not new, but rather it seems on both fronts they are coming to a head. Based upon the seriousness of these tensions, and the fact that they will probably not be result overnight, leads us to believe in the real potential for a strong upside move in the precious metals markets. Our upside target is currently 1327 in gold, and today's video will detail where that number comes from.

Trending Markets Forecast

For the last three days we have seen US equities markets close with very little change. At the same time today's low in both the Standard & Poor's 500 and the Dow Jones industrial average did trade below the 200 day moving average. However both indexes managed to close above them back in unchanged territory. It must be noted that with the geopolitical concerns that have been raised over the last few days we could see weakness enter into US equities.