Gold sank to its lowest levels since December 11th of 2017 in early trading on Thursday. The yellow metal has been pressured by the hawkish stance of the Federal Reserve, a strong US dollar and a robust U.S. economy.
On Tuesday the Trump administration announced a list of tariffs of 10 percent on $200 billion in Chinese goods, escalating the trade war between the world’s two largest economies. However, the traditional safe havens of the Japanese Yen and gold were not boosted by the news.
Investors have favored the U.S. dollar over gold as a safe haven asset amid the current trade dispute. The dollar has been underpinned by the fact that it is now widely anticipated that the Fed will implement a total of four rate hikes this year instead of three.
Looking at the daily chart above we can see that gold is at a key technical level, sitting on a major trendline that began in March of 2017. In June the bearish Death Cross (50 period SMA crossing below the 200 period SMA) formed, ushering in the recent selling. The prior low of $1,205 stands as potential support to the downside.