Trade Negotiations Result in Stalemate

May 10, 2019 - 8:10pm

 by Gary Wagner

The precious metals markets continued to react to the increased apprehension regarding the lack of any favorable resolution to the trade talks held in Washington on Thursday and Friday between the United States and China.

Market sentiment on Monday through Thursday was greatly influenced from the assumption that the two economic powerhouses would fail to reach any concrete and meaningful solution from the trade talks that took place over the last two days. The perception was that current negotiations would continue to deepen the ideological chasm, with negotiations resulting in a stalemate continue to lend credibility to that assumption.

The  trade discussions had the opposite  effect of moving any closer to a resolution, rather they had the net effect of both countries moving farther apart.

Both the United States and China have dug their heels in, drawing a hard line in the sand. President Trump’s increased pressure, and timing of swelling the tariffs from 10% to 25% went into effect at midnight last night. That action most likely will result in China retaliating. Both superpowers continued negotiations, although the fact that the Chinese delegation left in the afternoon strengthens the belief that there is less flexibility on both sides, indicating that a solution and resolution to the trade war is still far away.

As promised President Trump raised tariffs on $200 billion worth of Chinese exports from 10% to 25% at midnight last night. The response from the Chinese government is that “there will be retaliation for the actions of the United States”.

Equities globally had been under pressure for the better part of this week. However today the market shrugged off the lack of progress and finished today with respectable gains in the Dow (+0.44%), and the S&P 500 which gained +0.37%. The NASDAQ composite had the lowest percentage gains today with the value of that index increasing by +0.09%.

The entire precious metals complex gained value in trading today. However, there was a large spread between the price advances in gold and silver when compared to gains in both platinum and palladium.  Simply put, the price advances in gold and silver were dwarfed and fractional compared gains in platinum and palladium.

As of 5:00 PM EDT gold futures are fixed at $1286.80 after gaining $1.60 (+0.12%) on the day. Silver futures gained only $0.002 in value (+0.01%) and closed at $14.775. Palladium once again had  dynamic and exceptional price advances. Gaining over 5% ($65.00) in trading today the most expensive precious metal closed at $1348. Platinum gained almost 2% (+1.87%), a $15.90 price advance taking the most active futures contract to $867.30.

Gold futures gained a modest +0.10%, while the dollar index lost -0.08%. This confirms that today’s fractional gains resulted from a combination of bullish market sentiment and U.S. dollar weakness.

Wishing you, as always, good trading,

Gary S. Wagner - Executive Producer

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Gold Forecast: Proper Action
On Sunday we sent out a trade alert to enter a long trade in gold. We entered this position at $1285 with a stop at $1268. On Monday we sent out a trade alert to modify the stop to just below today's low at $1278.
 
Maintain long gold at $1285. Maintain the stop at $1278.
Gold Market Forecast
The trade negotiations which began yesterday will be certainly contending with more obstacles than previous trade delegations. With the countdown completed and tariffs went from from 10% to 25% changes the dynamics and differences between the two superpowers.
 
Negotiations ended this afternoon in a stalemate., both camps have dug deeper into their respective positions and dynamically extendsthe time frame for an end to the economic trade war. Thererfore we should see gold prices firm substantially next week.
Sentiment Indicator:
Gold -> Bullish
Silver -> Neutral
S&P 500 -> Neutral
Bitcoin -> Bullish