Gold Boosted on Latest U.S.-China Tariffs

September 2, 2019 | Monday



On Monday, gold increased following the newly imposed tariffs from the United States and China on each other's goods. However, the firmer dollar limited the yellow metal's upside. In addition to that, Washington started to impose on Sunday the 15% tariffs on a variety of goods from China. And these include smartwatches, footwear, and flat-panel televisions. Contrarily, China retaliated by setting new duties on U.S. crude. But still, U.S. President Donald Trump stated that they would push through their meeting for talks later this month.

Then, spot gold rose 0.4% at $1,525.57 an ounce. And it has fallen to a one-week low at $1,517.11 in the last session. Also, the U.S. gold futures were up 0.3% at $1,534.50 per ounce. Aside from that, trading might be quiet as U.S. financial markets are not available for the Labour Day holiday.

Georgette Boele, an analyst, stated, "There is nothing going on apart from the fact that the dollar is stronger." Also, she added that there was not much of a reaction in the surge of gold prices because they expected it to happen already.

Dollar and Gold

Meanwhile, the dollar, against its key rivals, scaled more than two-year high in the previous session. As a result, this made gold more expensive for investors holding other currency. Boele added, "We can expect a correction in gold prices as it had moved up so quickly that you don't need so much to trigger profit-taking."

Moreover, the trade war triggered a negative-yielding debt around the world. Also, it boosted hopes for interest rate cuts by global central banks. For these reasons, gold in August lifted as much as $100.

Meanwhile, this year, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, advanced around 12%. Then, speculators mounted their bullish stance in Comex gold and upped net long positions in silver contracts in the week to Aug.


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