The gold market ended last week with a bang, finishing higher by nearly two percent on the final trading day of the week. The market currently has upside momentum on its side and could potentially test the $1700 region in short order. The metal has numerous issues that may continue to provide strong tailwinds. The ongoing trade war, Hong Kong unrest and increasingly dovish central bank commentary may all keep the metals markets on the offensive.

The ongoing U.S./China trade war remains at the center of attention. Late last week, China announced that it would implement retaliatory tariffs on about $75 billion of U.S. goods. China’s finance ministry announced that it would place an additional tariff of 5 or 10 percent on U.S. imports starting September 1. The ministry also announced plans to resume tariffs on U.S. imports of autos and auto parts starting in mid-December.

President Donald Trump was quick to respond via twitter-his seemingly preferred vehicle. He has said the U.S. would respond, and markets will be watching closely this week for any further action taken. The President went on to add by tweet that: “We don’t need China and, frankly, would be far better off without them.”

The clear escalation of both action and rhetoric between the two superpowers had an extremely unnerving effect on the markets. The benchmark Dow Jones Industrial Average sank over 600 points while the tech-heavy Nasdaq declined by a solid three percent. It appears that there is not only a lack of progress at this point, but that the gap between the two sides is growing even wider.

Commentary from Fed Chairman Jerome Powell at Jackson Hole, Wyoming may also be a source of concern. Powell acknowledged that the economy is in a good place, and that the Fed would act as appropriate. He did, however, also highlight some key risks that could force the Fed’s hand. The Chairman’s speech seemed to back up the notion of another 25-basis point rate cut next month while easing expectations for a larger, 50-basis point reduction.

As some members of the Fed have sounded increasingly hawkish in recent weeks, Powell’s comments-which were largely construed to be dovish-may set some minds at ease. Powell seemed to grasp the significance of recent events and key issues such as Brexit, trade, Hong Kong and the global slowdown could force the Fed to have to maintain a large degree of flexibility regarding monetary policy.

Although trade may be a primary focus this week, markets will also be getting some key data points that could be significant heading into the next FOMC meeting. The latest figures on Q2 GDP, Durable Goods, Consumer Confidence, Core Inflation, Consumer Spending and more are all set for release.

Recent strength could keep the market moving higher in the next week, and any further negative developments surrounding the war on trade may keep buying interest on the rise. With little overhead resistance to speak of, the market could see another rapid and substantial run higher if new tariffs or other action is taken by either side. Any corresponding declines in stocks may also keep the yellow metal on the move.  Although the chart is highly constructive, the market could see a minor pullback in the sessions ahead. The market appears to have set a new, higher bar, however, and any dips may be shallow and aggressively bought.

The gold market is trading solidly above the key $1500 level as ongoing concerns over global growth and rising geopolitical risks fuel safe haven buying. The ongoing U.S./China trade war and increasing unrest in Hong Kong are at the center of attention as the new week kicks off.

Over the weekend, protests again took place in Hong Kong and concerns have been mounting about police handling of those protests. The weekend reportedly saw some of the worst unrest yet in the more than two months of demonstrations thus far, and allegations of police brutality are only aggravating the situation further. The Hong Kong airport authority was forced to cancel more than 120 flights on Monday as thousands of demonstrators filled the arrival and departure halls, joining a sit-in at the terminal that began late last week.

The Hong Kong airport is one of the globe’s busiest, and the shutdown shows just how much of an impact the protestors can have on the nation’s ability to function. The ongoing conflict is ratcheting up the pressure on authorities, who are growing increasingly concerned that the unrest could tip the local economy into recession. Hong Kong is already dealing with the effects of the U.S./China trade war, and analysts now wonder how much longer mainland China will allow the unrest to continue before a major crackdown is seen.

The trade war also continues to be a major influence on global financial markets and is the main culprit behind the recent volatility expansion. The most recent escalation saw China allow the value of the yuan to trade at the lowest level in more than a decade. The trade war could quickly become a currency war, and it has now been suggested that trade talks planned for next month may not take place at all. This has investors wondering not so much about when a deal may be reached, but rather what may happen if talks collapse completely.

If no progress towards an agreement is made, further tariffs and possibly even currency interventions could be seen. The global economy will almost certainly fall into a significant recession. The Federal Reserve will do what it can to combat the slowdown but may find its efforts largely ineffective as it can only cut rates so much. The central bank could then be forced to implement fresh QE or other measures to stimulate the economy, and it could potentially take years for activity to return to pre-crisis levels.

The current environment of economic and geopolitical risks, negative yields, central bank easing, and rising market volatility could continue to be very supportive of higher gold prices. The market has quickly and decisively distanced itself from the $1450 breakout region and could potentially see another rapid run higher if tensions escalate further. Against the current economic and geopolitical backdrop, a run towards previous all-time highs near $2000 per-ounce is not only plausible but increasingly likely. In the meantime, the market may need to spend some time digesting recent gains before forging ahead. Any dips in price are likely to be shallow and may be aggressively bought.

The gold market appears to be treading water in early action Monday as markets get ready for a variety of key data points and news. At the center of attention will be the FOMC meeting taking place Tuesday and Wednesday as well as the non-farm payrolls report due out Friday. In addition, high level talks will be taking place this week in Shanghai as the U.S./China trade war continues.

The Fed is widely expected to cut its key interest rate by 25-basis points at the conclusion of its two-day meeting Wednesday. Although the Fed could potentially take a more significant approach and cut rates by 50-basis points, recent data has suggested such a move may not be warranted at this time. Markets have already priced in a quarter-point cut and will be far more interested in any clues the Fed provides about policy going forward. Some analysts have suggested that a rate cut this week is simply an “insurance” cut and is intended to get ahead of the ongoing global slowdown. Others have suggested that it may be the first in a series of cuts that could potentially see rates back at zero in the quarters ahead.

The Fed’s language has the potential to move markets. If the central bank views this as an insurance cut and does not allude to further cuts, it could disappoint stock investors and send equity markets lower. The dollar could potentially get a boost as well, weighing on hard assets. If the Fed’s commentary reflects an increasingly dovish Fed, stocks and gold could rally together while the dollar weakens.

The non-farm payrolls data at the end of the week could help temper expectations for further action from the Fed. After a solid addition of 224,000 jobs in June, July estimates put job creation at a respectable 165,000. If the report meets or exceeds expectations, it could potentially give the Fed further reason for pause.

In addition to the Fed and economic data, markets will be paying close attention to any progress in trade talks this week. Treasury Secretary Steve Mnuchin and Trade Representative Lighthizer are in Shanghai this week for talks that begin today. Although there has been little progress to report in recent weeks, both sides appear to be increasingly eager to hammer out a deal. A successful meeting this week could lay the groundwork for further dialog between President Trump and Chinese Leader Xi Jinping.

The gold market may find itself in a holding pattern until the Fed announcement Wednesday. A quarter-point cut may not have a huge impact on markets but may give the gold bulls the green light to attempt a fresh leg higher. The market may find willing buyers on dips to $1420 and $1400 per-ounce, while recent highs in the $1450 region may act as near-term resistance. An upside breakout of recent highs could potentially set the stage for a sharp and significant rally higher that could see prices hit $1500 in short order. With little upside technical resistance, strong market fundamentals could propel prices to previous all-time highs or beyond in a matter of months.

The gold market is slightly lower in early Monday trade; however, the market remains firmly above the psychologically important $1400 level. Global stocks appeared headed for a flat open as investors get ready for the Q2 earnings season and await some key pieces of economic data. Overnight, data from China showed the weakest GDP growth in 27 years. Markets are not showing much reaction, however, as June retail sales, industrial output and fixed asset investment all surprised to the upside.

AS the U.S. Fed guides the nation towards easier monetary policy, investors may turn their attention to corporate earnings while also watching for any fresh developments in the U.S./China trade war. Markets may be particularly interested in the corporate outlook for the second half of the year, and companies could provide further clues about the effects of the trade war. The war on trade is likely to remain a key theme in the marketplace as neither side appears willing to budge at this point. Corporations could be forced to lower guidance based on current tariffs and could even alter their plans based on the threat of additional tariffs.

The Fed is expected to cut its key interest rate by 25-basis points at the end of this month and could potentially cut it by 50-basis points in order to create more of a shock-and-awe effect. It is clear the central bank will be forced to lower rates, but the bigger question at this point is by how much and how fast. With little to no inflation to speak of, the central bank could become fairly aggressive as it lowers rates again, and some analysts have even suggested the Fed could take rates down to zero.

The combination of a global slowdown and trade war will force the Fed’s hands, and in turn should keep gold on the offensive. The dollar index, which has spent much of the last couple years moving higher, appears to have found a top. As the effects of tax cuts and government spending wear off, an increasingly dovish Fed could send the dollar index sharply lower. A breach of the $96 level on the downside could potentially set the stage for a steep decline, and hard assets like gold could stand to benefit.

As the dollar tries to avoid a major technical breakdown, gold appears on the verge of a major upside breakthrough. The market has thus far maintained trade above the $1400 level, and recent dips have been bought. With the market trading at multi-year highs, the yellow metal may simply need to take out the highs reached in June in order to really blast off. An upside breakout of this level, which saw spot prices approach $1420 per-ounce, could set the stage for a rapid run to the $1600 area. From there, a retest of previous all-time highs could be seen.

The threat of a global recession, numerous geopolitical risks, a dovish Fed and the potential for lower stocks and a lower dollar may all keep the gold market well-supported in the months ahead. In fact, the current economic and geopolitical climate could be the perfect recipe for higher gold prices, and the long-anticipated bull market in gold now appears to be gathering steam.

The week ahead could potentially see some increasing appetite for risk as President Trump and Chinese Leader Xi Jinping agreed to a truce of sorts on global trade. The news sent stocks sharply higher in early action Monday while gold declined by almost 2 percent.

The meetings between the leaders of the globe’s first and second-largest economies were considered productive. The U.S. agreed to back off on some of its threatened sanctions, while China agreed to purchase more U.S. agricultural products. With both sides seemingly willing to hit the reset button on negotiations, optimism is running high and hopes for a deal are on the rise. Despite recent positive developments, however, there is still much work to be done in order for both countries to finalize and agree to a long-term trade pact. The ongoing process of producing such an agreement could take several months or longer, and markets will likely remain quite vulnerable to any negative developments on trade.

President Trump also made a surprise visit to North Korea over the weekend and met with leader Kim Jong Un. Trump made history, becoming the first sitting U.S. President to set foot into the country.  Both nations have said they will resume talks over North Korea’s nuclear program. Although the U.S./North Korean conflict has been quiet and on the backburner in recent months, any easing of tensions between the two nations could also fuel buying in stocks and risk assets while weighing on perceived safe havens such as gold.

The dollar index was trading at the highest level in over a week on the news and is also likely playing a key role in gold’s declines today.

The benchmark S&P 500 is in all-time record high territory, and could potentially see a slew of fresh buyers as FOMO, or the Fear Of Missing Out, sets in. In addition to the trade war truce reached over the weekend, investors are also betting big on a rate cut from the Federal Reserve later this month. The notion of a July rate cut and possibly additional cuts to follow could keep the stock market on the offensive and risk appetite elevated.

The gold market has had an impressive run in recent weeks, and today’s declines may represent the first significant test of the recent uptrend. The bulls will need to step up this week to keep the uptrend intact, and prices may need to reclaim the $1400 level in short order to avoid another push lower. The $1450 region remains an area of focus on the upside. An upside breakout of this level on a closing basis could potentially set the stage for a major rally that could see prices retest previous all-time highs over $1900 per-ounce. A failure by the bulls to take this level out could lead to an extended period of sideways price action.

Despite recent developments, the gold market still has numerous factors working in its favor. A slowing global economy, the potential for lower interest rates, a weaker dollar and numerous geopolitical risks may all keep a floor under prices.