Lawrence GashGold prices have risen once again as uncertainty over the progress of US-China trade talks continues.
The climate has been highly volatile, with spot gold reaching a two-week high on Wednesday November 20 before dropping more than 0.5 per cent the following day. In mid-morning trading on November 22, spot gold was trading at $1,472.18, a gain of 0.62 per cent.
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Throughout 2019 and particularly in recent months the gold price has almost directly correlated with the mood music coming out of discussions between Beijing and Washington. The price of gold has gained by 14 per cent since the start of 2019 and could rise yet further as doubts continue as to the likelihood of a Sino-American trade deal being reached in the near future.
An upswing in the price of gold can be attributed to retaliatory comments made by China’s President Xi Jinping. Speaking to a group of delegates and journalists at the Bloomberg New Economy Forum in Beijing, Xi said: “When necessary we will fight back, but we have been working actively to try not to have a trade war. We did not initiate this trade war and this is not something we want.”
Xi’s US counterpart Donald Trump has routinely asserted that China actually initiated the trade war when it entered the World Trade Organisation (WTO) 20 years ago and that he is only reacting.
This reaction comprised the imposition of tariffs on tens, if not hundreds, of billions worth of Chinese goods and the blacklisting of major Chinese technology companies, such as Huawei.
For its part, China has responded with smaller but targeted tariffs on US soybean producers and auto-makers, both key industries in areas that Trump will need to win in next year’s election.
The ongoing unrest in Hong Kong has further soured relations with both nations accusing each other of escalating violence.
Earlier this week, Trump stated: “China is going to have to make a deal that I like. If they don’t, that’s it. If we don’t make a deal with China, I’ll just raise the tariffs even higher.” If tariffs are indeed raised then gold will surely gain even further.
