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U.S. markets are on a tear Tuesday as investors return from the Memorial Day holiday weekend. Investors appear to be feeling less anxious, as the benchmark Dow Jones Industrial Average is up nearly 700 points for a gain of nearly three percent. Hopes for an economic recovery and fresh news about a potential COVID-19 vaccine are behind the day’s gains in stocks.

As stocks are on the rise today, gold has been on the decline. The yellow metal has shed nearly $30 per ounce in early afternoon trade. It has maintained trade over the $1700 level, however, and today’s dip could be viewed by some as a buying opportunity.

Although things may look a bit more promising for investors today, U.S./China trade relations continue to deteriorate. The recent exchange of barbs between the globe’s first and second-largest economies has done some damage, and those wounds may take significant time to heal. At risk is the initial trade agreement reached between the two nations a few months ago. If that agreement were to fall apart, it could set the stage for a multi-year battle that could potentially fuel global economic damage. Some have suggested that relations between the U.S. and China going forward could be similar to those seen between the U.S. and U.S.S.R during the Cold War. The U.S./Soviet conflict lasted for decades and so could the conflict over global trade.

In a move that is unlikely to please the Trump administration, the Central Bank of China this week fixed the value of its currency, the yuan, to the weakest rate against the dollar in about a dozen years. Any further escalation in the trade standoff could send stock markets sharply lower while providing fuel for the gold bulls. The U.S. also commented on Chinese plans to implement national security laws in Hong Kong and said that such a move would be met with sanctions. Protests in Hong Kong have recently resumed and could become an increasing source of global geopolitical tension.

In other news, the crude oil market continues to rise, and additional production cuts are forcing a soak-up of current inventories. Russia has recently discussed extending its agreed-upon cuts past June in an effort to rebalance the oil market that has seen a major crash that took prices for May delivery into negative territory at one point. It is unclear if Russia will in fact extend cuts to its production, but it has become very clear that the market is oversupplied while demand has declined significantly. Higher crude oil prices may potentially be bullish for gold, as investors look to hedge against rising inflationary pressures.

The gold bulls remain in technical control of the market. They will need to show some signs of life soon, however, to avoid further selling pressure taking the market back below the $1700 level. Support may be found in the $1670ish region if the market does see a further dip. The bulls are not likely to get overly excited until the market rallies above $1750 on a closing basis.