The prices of gold increased close to a one-month high on Wednesday on U.S. President Donald Trump’s negative comments on the trade agreement with China. His statement boosted the demand for safe-haven assets.
U.S. gold futures were unchanged at $1,484.60 an ounce but spot prices rose by 0.1% to $1,478.81 an ounce.
Yesterday, Trump said that any deal with China will have to wait until after the 2020 presidential election. He made this comment not long after he imposed tariffs on aluminum imports from Argentina and Brazil which pushed the price of the yellow metal to its highest level since November 7. His statement also sent the greenback to its one-month low and extended the losses of the Asian stock markets.
According to OANDA Asia Pacific senior analyst Jeffrey Halley, the negative effect of Trump’s statement on the stock markets and the U.S. dollar benefitted the precious metal. His remark that the trade deal will have to wait after the election and the U.S. Congress’ approval of the second China bill has raised fears that China might withdraw from the negotiations.
The U.S. House of Representatives has already passed the Uygur Intervention and Global Humanitarian Unified Response Act (UIGHUR Act) of 2019. It would require the U.S. government to toughen its response to the crackdown of Muslims and other minorities in the Xinjiang Uyghur Autonomous Region. The bill will also require the U.S. president to identify Chinese officials involved in human rights violations in Xinjiang. These developments led investors to be seriously concerned about the further deterioration of the Sino-U.S. trade negotiations.
Another problem for the trade talks is U.S. Commerce Secretary Wilbur Ross’ refusal to accept any trade deal deadlines and his renewed attack on Chinese telecoms company Huawei.
Meanwhile, Reuters technical analyst Wang Tao predicts that gold may reach $1,493 an ounce since it has already passed the resistance price level of $1,478 an ounce.