Quick overview

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US President Donald Trump’s remark that triple-digit tariffs on China are unsustainable caused gold to plummet 2% after hitting a record high of $4,379 earlier Friday. Bullion prices are currently trading between $4,230 and $4,240 at the time of writing. Gold is weakened amid the greenback’s recovery.

The largest change, however, is in US Treasury yields, where the yield on the 10-year T-note has increased by almost three basis points.

US President Donald Trump stated that he expects to meet with Chinese President Xi Jinping in South Korea in a few weeks and that imposing higher threatened tariffs on China was not feasible and would probably worsen tensions between the two nations.

Precious metals dropped as a result of those remarks, which also improved risk appetite. However, the upward trend in gold is present around the $4,200 mark, as the ongoing pullback make room for buyers. Gold fell by almost 25% in a month after prices peaked in 2006, the last time we witnessed a similar situation.

Once more, those warning signs are flashing, indicating an impending peak, and our analysis suggests a possible decline to the $3,500 mark. Officials at the Federal Reserve (Fed) had stepped over the line.

Fed President Alberto Musalem remains fully committed to bringing inflation down to the 2 percent target. Fed Governor Christopher Waller earlier echoed Musalem’s remarks, while Minneapolis Fed Neel Kashkari stated that the economy is not slowing as much as we believe.

Silver, meanwhile, has formally ended its 45-year cup-and-handle configuration. Although prices may rise before falling back, markets expect that a move towards $200 is fair value in the long run, particularly as a decades-long period of manipulation comes to an end. Gold is currently ignoring the upper trendline resistance, indicating a potential blow-off top akin to 2006.