Gold Prices Reach Six-Year High

Finally, gold hit yet a new six-year high on Friday, boosted by a double whammy of increased global risk concerns and expectations of lower interest rates from the Fed in reaction to trade-related economic pressures.

We discussed gold early this past week when price was still consolidating in a rough pennant pattern, which is usually considered a trend continuation formation. Now, the price of gold has tentatively broken out of that pattern, which hints at a potential extension to the upside. If trade and economic concerns resume in the week ahead, which is likely, gold may be poised to reach for higher highs.

The Bottom Line

While it may seem that the sky is falling right now, it most likely isn't. Trump's tweets and pronouncements have long roiled markets, but it would likely take much more than tweets about tariffs to do any major, lasting damage to the markets.

There's been much speculation that the threat of tariffs may be yet another ploy, this time both to pressure China into striking a deal more favorable to the U.S. and also to compel the Fed to take on a more aggressive rate-cutting stance.

In any case, while it may not be a good idea to try catching falling knives, investors should be alert to opportunities once downside momentum has been exhausted.