Gold holds firm on Tuesday, finding support from rising geopolitical risks due to US President statement on Sunday saying that he would increase tariffs to Chinese goods and impose new tariffs to remaining Chinese imports. It was claimed that Chinese officials were considering cancelling the planned US visit to resume trade talks this week, however, China Ministry of Commerce said on Tuesday that Chinese Vice Premier Liu He would be visiting Washington on May 9-10. US Trade Representative Robert Lighthizer said China reneged on commitments it made earlier and this was unacceptable as he added tariffs would increase on Friday. In the meantime, Dallas Fed President said on Monday that inflation would be closely watched and added he was not in favor of a rate cut.
Gold prices hold firm on Tuesday.
After starting the week edging up following US President tweet stating that tariffs on Chinese goods would increase on Friday.
| 17 Dec 2021 | USD | CAD | EUROS | CHF |
|---|---|---|---|---|
| gold price per gram. 999 Gold/24 Kt | 58.11 | 51.31 | 54.04 | |
| Gold price per ounce. 999 Gold/24 Kt | 1807,50 | 1595,84 | 1680.644 |
London spot gold was trading at $ 1807,50 an ounce while dollar index was steady at 97.61. US 10-year Treasury yield was down to 2.478.
SPI Asset Management market strategist Stephen Innes said on Reuters that there were significant catalysts for gold prices however seeing no major movement upside was a surprise. No major movement in gold prices is taken as a sign that there are still hopes for possible positive outcome from upcoming trade talks in Washington this week.
It was claimed that Chinese side was considering cancelling planned trade talks after President threats, however China Ministry of Commerce announced on Tuesday that Chinese Vice Premier Liu He would visit the US on May 9-10. While there has been no response from Chinese officials to President threats so far, the visit is shorter than previously expected. On one side, some analysts think the possibility of ending negotiations without a deal increased pointing out the change in “tone”comparing to previous weeks, on the other side, some says Chinese public would view it as a capitulation if Beijing reached a trade deal before Friday.
US Trade Representative Robert Lighthizer said on Monday that China reneged on commitments it made earlier and added this was unacceptable as he said Trump administration would increase tariffs from 10% to 25% on Chinese products worth $200 billion as of Friday. According to some analysts, there are no options left for China except agreeing to change its economic model or facing the consequences.
In the meantime, Dallas Fed President Robert Kaplan said on Bloomberg that there was downside pressure to inflation and some of those were structural while adding he was not in favor of a rate cut. In its last meeting, Fed had disappointed expectations of a possible rate cut by stating reasons behind weak inflation were believed to be transient.