The US stock market held up very well today in the face of Trump's escalation of his trade war with the world over the weekend. Maybe that's because he threatened that his latest tariff salvo won't be fired until August 1 (i.e., Liberation Day II). So there is still time to negotiate trade deals. Today, he also threatened to impose 100% "secondary" tariffs on any country doing business with Russia if a Ukraine ceasefire isn't secured within 50 days.
Secondary tariffs are duties imposed on third countries that do business with a sanctioned nation and are designed to isolate that nation economically by targeting its trade partners. So, Trump’s latest threat amounts to another round of tariffs on countries that import Russian oil, such as India and China. The European Union also purchases oil and gas from Russia, totaling $24 billion last year.
We don't like to draw too many conclusions from one day's trading, but we noticed that the price of gold edged down and the value of the dollar edged up on Trump's latest “tarrifying” news. Everyone is bearish on the dollar, except us (it seems).
From a contrarian perspective, today's Wall Street Journal included an article titled "Plunging Dollar Leaves American Travelers With Less Buying Power This Summer." Such headlines often occur at turns in the dollar. That would be consistent with the DXY dollar index’s rebounding off the bottom of its upward channel (chart).
We remain bullish on gold, although the current consolidation may persist through the summer. The price has remained contained within its ascending channel (chart).
