Trump – China Talks Could Jolt Higher Gold Prices
Gold prices rose to $1,253 per ounce as U.S. and Chinese leadership prepare to meet this Thursday.
Gold prices have experienced a strong surge in the latter half of March, following the U.S. Federal Reserve striking a more dovish tone on interest rates. Many analysts had expected to see a more aggressive rate hike both in March and throughout 2017, but the Fed was decidedly more passive, which led to a resurgent bullion. (Source: “Global gold prices fall on firmer dollar,” Livemint, April 3, 2017.)
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Gold prices tapered off last week as the U.S. dollar held firm and the initial Fed bump subsided.
The precious metal is set to again be on the rise this week, however, as U.S. President Donald Trump and Chinese President Xi Jinping will meet this Thursday in Florida.
Tensions between the current U.S. presidential administration and China have been high, with a bellicose tone towards China being struck during Trump’s campaign for the White House, especially concerning trade.
Some analysts were and are concerned that Trump may be looking to initiate a trade war against China, which would drive the interest in gold prices higher as it would be a risk-management asset if the U.S. dollar or Chinese yuan were to flag as a result of the political fallout.
While there are other topics that will likely be discussed later this week between the two leaders—like the threat of North Korea—the market is likely to be most impacted by the resulting trade implications from the talks.
India has also experienced increased demand for the metal, again helping spur on the growth seen in gold prices. (Source: “Gold prices rise on sustained buying during Navratra,” Livemint, April 3, 2017.)
A Fed official said on Friday that there may be a pause in interest rate hikes when it begins to shed its bond holdings, which would benefit gold prices as well.
