Can Trump’s New War Push Gold to New Highs?

Gold spiked to 5-month highs the after Trump launched his missile strike on Syria late last week.

But the gains didn’t hold.

By the end of trading the very next day, gold’s spot price had given back most of its overnight gains, slipping back into its trading range. It wasn’t ready to break out just yet…

As it turns out, last week’s move was just a sneak peek of what was to come. Now that the entire country is completely distracted by cops dragging that doctor off a United Airlines flight, gold has once again spiked to new year-to-date highs.

“This is what I get for shorting gold as it breaks out to five-month highs…”

This time the move stuck.

Gold settled at new highs yesterday, smashing above its 200-day moving average. The Midas metal extended its year-to-date lead over the major averages during a tricky trading day that saw stocks finish flat while precious metals and volatility snuck higher. After precious metals endured a miserable March pullback, traders are readjusting. A new leg higher is the result.

As of yesterday’s close, the Dow Jones Industrial Average is up 4.5% year-to-date. Meanwhile, gold is up nearly 11% and counting. While stocks remain confined to a tight trading range, gold is looking stronger every day…

Gold’s performance is a complete shift from the action we witnessed in the precious metals market during the fourth quarter. You’ll recall that gold almost fell apart at the end of 2016. But the new year helped turn things around in the precious metals world. Thanks to its improved performance to begin the year, the Midas metal started off on the right foot. Now that gold has shaken off its March drop, we’re seeing more constructive action.

We’ve stayed right on top of the precious metals comeback. Now we’re seeing more evidence pointing to additional gold gains as earnings season approaches.

A little volatility returning to the markets is strengthening gold’s case for higher prices. Yesterday, the VIX (commonly known as the market’s “fear gauge”) launched to levels we haven’t seen since the presidential election. Investors are finally showing the first signs of fear in 2017.

But a couple of big questions continue to loom over the market:

Will investors follow through with significant selling and put some pressure on stocks? And will Trump push gold higher by beating the war drums?

Right now, the masses are starting to worry about war. According to Google Trends, searches for “going to war” have jumped to levels we’ve never seen before. Have a look for yourself:

Interest Over Time

“Given the interconnectedness and tensions rising everywhere, the fuse is lit and it seems the world’s population is increasingly realizing we’re going to war,” ZeroHedge writes.

We’ll have to wait and see if this spike is temporary – or if the sound of war drums continues to weigh on stocks as we get into the meat of the second quarter.


Greg Guenthner
for The Daily Reckoning

You May Also Be Interested In:

Greg Guenthner

Greg Guenthner, CMT, is the editor of Opening Bell Fortunes and Seven Figure Signals. He has been with Agora Financial/Seven Figure Publishing since 2005. In 2019, the average position in Greg’s Sunrise Fortunes portfolio outperformed the S&P 500 by 1.65x.

View More By Greg Guenthner