Gold continues to be pushed higher by two......>

GOLD: Gold continues to be pushed higher by two main factors:

1) US-China trade talks. Tensions continue to escalate, and risk-off flows

continue to build. President Trump has promised extra tariffs on September 1 if

there is no deal, the PBOC has let USDCNY rise above 7 in retaliation. It is far

from clear that we will see a deal imminently and the longer talks drag on the

more concerned the market will be.

2) Global monetary policy is becoming looser. 10y UST yields have fallen the

best part of 150bps from 3.25% in October 2018 to 1.77%. The Fed have already

cut rates 25bps. Every German bond in issue now has a negative yield and the ECB

have signalled easing lies ahead in September. Even with 10y Bund yields at

-0.52% if the ECB cut the deposit rate 20bps, yields could fall another 10bps.

TECHS: In addition, the technical picture for gold looks very positive.

Near-term resistance comes in with the 50% long-term Fibo at $1484 and monthly

trend channel top at $1508. We broke through the top of the ascending triangle

back in June. The target from the triangle breakout is around $1680. If trade

talks collapse, we could see a breakout to the Oct 2012 highs of close to $1800.