Traders Continue to Focus Upon Trade Dispute

As of 4:00 PM Eastern standard time, market participants continue to focus upon the current trade dispute between the United States and China as they await news from the administration in regard to whether the United States will impose additional tariffs.

According to a report by Reuters, “U.S. President Donald Trump said on Monday he would announce his latest plan on China tariffs after the markets close, with expectations he would level them on about $200 billion of Chinese imports.”

However this seems to be part of the mixed messages being received as earlier Larry Kudlow, economic advisor to the president, said that, “We are ready to negotiate and talk with China any time that they are ready for serious and substantive negotiations toward free trade to reduce tariffs and non-tariff barriers, to open markets, to allow the most competitive economy in the world, ours, to export more and more goods and services to China.”

At least for today, this news has been highly supportive of gold pricing as the U.S. dollar has come under pressure. Currently, the dollar index is down almost half of a percent on the day, declining 43 points and currently fixed at 94.075. This has been highly supportive of gold. Spot gold is trading just above $1,200 per ounce, currently fixed at $1,200.75, for a net gain of seven dollars on the day.

According to the KGX (Kitco Gold Index), today’s higher pricing, for the most part, can be attributed to dollar weakness which is accounting for $5.60 of today’s gains, with the remaining gain of $1.50 as a result of traders buying the precious yellow metal.

The question that remains is how market sentiment will be shaped if Trump imposes a new round of tariffs. It is highly expected that the administration will announce an additional $200 billion of Chinese imports to have tariffs levied against them. According to new sources, the belief is that these additional tariffs will be approximately 10% levied against Chinese imports.

Recently the trade dispute has had a negative impact on gold pricing as it is supported the U.S. dollar. According to Jonathan Butler, commodities analyst at Mitsubishi in London, "The main issue is that this concern over trade tensions between the U.S. and China is translating into a stronger dollar, and that is weighing on gold."

Gold continues to hover right around $1,200 per ounce both in the futures and spot markets. Obviously, the future direction of gold will be intrinsically tied to the outcome of the current trade dispute, and whether it will become a full-blown trade war.

Wishing you as always, good trading,