What began as a quiet week for gold took an unexpected turn on Thursday afternoon when speculation emerged that gold bullion imports into the United States would, in fact, be subject to tariffs—despite earlier assurances from the Trump administration that they would not. This news triggered a sharp spike in COMEX gold futures into Thursday night. However, with no follow-through, I was cautious and waited to see Friday’s close before drawing conclusions and publishing an update on the situation.
My skepticism proved warranted when, on Friday afternoon, the Trump administration announced it would issue a new policy clarifying that gold bar imports should not face tariffs. The reversal sent COMEX gold futures tumbling in a sharp whipsaw that left many traders puzzled. In this update, I’ll break down what happened, share my assessment, and outline where I believe gold is headed next.
The intraday chart of COMEX gold futures on Thursday and Friday shows the complete round trip triggered by the bungled tariff announcement and its subsequent denial:
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Notably, only COMEX gold futures, which reflect the U.S. domestic gold price, spiked and plunged on the tariff announcement and denial, while the global spot price of gold barely moved:
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The intraday chart below shows the spread between COMEX gold futures and the spot price of gold. After Thursday’s announcement, futures surged by $73 an ounce over spot, climbing to as much as $137.20 above the spot price before sinking back to roughly where it started by Friday’s close. This occurred because, had the bullion tariffs been real, the U.S. domestic gold price would have risen above the global price—at least until additional domestic supply entered the market, which could take some time.
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By Friday’s close, the tariff saga still left COMEX gold futures at four-month highs and breaking out of the triangle pattern, with strong trading volume, that I discussed earlier this week. Ordinarily, that would be a very bullish signal. However, the lack of confirmation from the spot price of gold makes me question its validity, as I will show next.
That said, this breakout may still prove valid, and I am now watching to see if COMEX gold futures can close above the $3,500 resistance level on strong volume, which would lend far more weight to the breakout since horizontal resistance levels are generally more significant than diagonal ones.
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A quick look at the spot price of gold in U.S. dollars shows it is also trading within a triangle pattern. Unlike COMEX futures, however, it has not yet broken out—and I want to see that before feeling confident that gold is experiencing a broad-based global breakout rather than a U.S.-only move driven by tariff-related price distortions.
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I also monitor gold priced in other major currencies to remove the impact of U.S. dollar fluctuations and confirm that gold is actually strengthening in its own right rather than as a byproduct of dollar weakness. In euros, gold is still consolidating between €2,700 and €3,000. To confirm a true breakout, I want to see a decisive close above the €3,000 resistance level.
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I also like to monitor gold priced in the World Currency Unit (WCU)—a composite currency based on the GDP-weighted average of the world’s 20 largest economies. In many ways, it offers one of the most balanced and accurate reflections of gold’s true global performance, which is why I’ve been paying close attention to it.
Gold priced in World Currency Units (WCUs) remains in a clear range between 2,400 and 2,600. A decisive break above 2,600 would signal that gold is truly ready to resume its bull market.
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I also closely monitor gold futures on the Shanghai Futures Exchange (SHFE), as Chinese traders have increasingly become a major force driving gold’s price action—including much of the bull market over the past year, as I explained in a recent report.
A look at SHFE gold futures shows that the uptrend remains firmly intact, though the metal is currently consolidating within a range between 750 and 820. A decisive close above the 820 resistance level will signal the start of the next major leg higher.
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A major driver of gold’s price is the U.S. dollar, with the two typically moving inversely—dollar weakness tends to boost gold, and vice versa. As I’ve been pointing out, the U.S. Dollar Index has broken below the key 100 level, creating a downward bias as long as it stays beneath that now-resistance level (learn more). The dollar also remains highly overvalued relative to other major currencies, increasing the likelihood of further weakness, which would be supportive for gold.
In recent months, the Dollar Index has been trading in a choppy manner amid tariff speculation and mixed economic data showing both strength and weakness. It recently tested the 100 resistance level again, underscoring its significance and why it should be watched closely. I expect the Dollar Index will soon pick a direction and trend strongly, possibly when low-volume summer trading conditions come to an end in the coming weeks. Whatever direction the dollar takes from here will likely have a major influence on gold’s next move.
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Politics aside, analyzing the markets under a Trump presidency is proving extremely challenging. I, along with many others, am growing increasingly frustrated with the constant tariff back-and-forth and other policy speculations—especially the repeated pattern of initial tariff announcements followed by predictable walkbacks. Copper was similarly hit by a tariff announcement and walkback, as I noted in my July 31 update.
Whether you agree with tariffs or not (I lean toward free markets and free trade), the way these announcements and negotiations are handled is chaotic, confusing, and nearly impossible to track. In my view, it’s also a waste of our collective time and energy. A recent ZeroHedge article by hedge fund manager Harris Kupperman captured this frustration well, reflecting what many in the industry feel.
As always, I’ll continue to track developments and keep you updated on how this situation affects gold. The main question now is whether gold is about to break out from its summer consolidation phase and make a run toward $4,000+ this fall.
If you’ve enjoyed this report or have any questions, comments, or thoughts, please give this post a like and share your thoughts in the comments below—I’d love to start a dialogue and hear your perspective.
Source https://thebubblebubble.substack.com/p/tariff-confusion-sends-gold-on-round
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