In “Post-Fed Rally: Good as Gold”, I concluded that gold futures prices looked “poised to shape a new upleg and test $1281 in coming weeks”. The level, corresponding to both a 61.8% Fibonacci retracement and a 61.8% target, constituted a fairly significant technical resistance and bypassing this threshold is a notable bullish development. 

Over the past few weeks several political and geopolitical factors goaded safe haven assets higher, providing a particularly positive environment for gold and helping to push it past this fairly important resistance. 


Geopolitical tensions have escalated significantly recently, particularly over Syria and North Korea. Following a chemical weapons attack on April 4 ascribed by the US to the al-Assad regime, President Trump ordered the first direct military strikes against the Syrian government on April 6. 

On the day prior to the US bombing, Trump’s comments at a press conference with King Abdullah II of Jordan that the Assad regime had “crossed a lot of lines” led to gold futures prices rallying from $1248 to $1260.9, a 1% move. As the strikes, which occurred during Chinese President Xi Jinping’s visit, began to take place prices rose nearly 1.5% (from $1253 to $1271.5) in less than an hour.

Not surprisingly the bombing drew ire from Russia, a Syrian government ally, particularly as the US posited the Kremlin may well have been aware of the chemical attacks before they happened. With US-Russia relations at a “low point”, as Secretary of State Rex Tillerson pointed out during his visit to Moscow last week, tensions between the two nuclear superpowers appear likely to remain high in the short-term and supportive of gold prices. 

Tensions have also ratcheted up in the Korean Peninsula in the past few weeks, as saber-rattling by both North Korea and the US has escalated anxiety levels on all sides. Ahead of the military parade celebrating the 105th anniversary of the birth of North Korea’s founding President Kim Il-sung, President Trump sent an “armada” to the Peninsula. Trump has increasingly put pressure on China to “deal with North Korea”, claiming that “if not, we will solve the problem without them”, while using future trade negotiations as leverage for Chinese collaboration on the matter. 

Print Friendly, PDF & Email