Jim Wyckoff
3 min read
In This Article:
The past six weeks have seen the gold (GCQ25) market trading in a sideways and choppy fashion at price levels not far below the record high of $3,485.60 scored in late April, basis nearby Comex futures (GCM25). The near-term and longer-term technical postures for the gold market remain overall bullish.
However, the yellow metal bulls do appear to be tired amid a very mature bull market run that dates to late 2015, when prices started to trend up from a low of $1,046 an ounce.
Importantly, the fact that recent conflict between Israel and Iran that that involved major U.S. military airstrikes did not push gold prices to a new record high suggests that all the known bullish fundamentals in the gold and silver markets have already been factored into prices.
Those known bullish fundamentals include increased buying from central banks around the world, a depreciating U.S. dollar on the foreign exchange markets, the potentially destabilizing impact on the global economy from tariffs, and better retail demand from Chinese and Indian consumers.
In other words, the gold and silver markets are very likely going to need a major, fresh fundamental event to push the precious metals prices to new highs. That fundamental event could be a new and unexpected geopolitical development. Such could come from a renewed, major flare-up in the Middle East, or in the Russia-Ukraine war, or a serious deterioration in ongoing but presently languishing negotiations to improve global trade relations — namely between the U.S. and China.
The global trade situation had been pushed to the back burner over the past few weeks, amid the Israel-Iran military conflict. However, it’s likely world trade relations and this year’s new tariffs will become much more sensitive in the coming weeks. Many economists and analysts are reckoning it will be very difficult and time-consuming to unwind this year’s implemented tariffs, let alone come to agreement on the future path of global trade.
Said David Morrison of Trade Nation in a Wednesday morning email dispatch: “It’s worth remembering that China-U.S. trade issues remain unresolved. Chinese Premier Li Qiang struck a cautionary tone overnight, urging global leaders not to let trade disputes become overly politicized. The remark underlined the fact that while the Israel-Iran hostilities and subsequent ceasefire have pulled the focus somewhat, other sources of tension continue to tick along under the surface, for now.”
