The gold price increased Wednesday with a deadline for an additional round of U.S. tariffs on Chinese imports approaching. There is no so-called ‘phase-one’ deal in sight, and a U.S. central bank policy meeting could provide an outlook for 2020, causing either an increase or decrease in the price of gold.
Gold increased 0.43% to $1,470.25 per ounce, as gains extended into a third straight session. U.S. gold futures increased 0.47% higher to $1,475.0
In the latest events during a 17-month long trade war, U.S. President Donald Trump will decide this week whether or not to implement more tariffs on $160 billion in Chinese goods. Economic and trade advisors are expected to meet in coming days with Trump over the final decision, a source told Reuters.
“Gold has been up because of the uncertainty of the trade talks, along with the FOMC meeting this afternoon,” said Bob Haberkorn, senior market strategist at RJO Futures.
The Fed is not expected to change the rates much and neither is the European Central Bank in its Thursday meeting regarding that bank’s rates.
“The global economy appears to have stabilized after a year of growth uncertainty. If yields on U.S. 10 (Treasury) yields rise above 1.90%, we think that will signal the end of golds rally and push prices below $1,400/oz,” analysts at OCBC bank said in a note.
Meanwhile, palladium continues to break records, increasing 0.6% to $1,907.70 per ounce. Mine shutdowns in South Africa due to blackouts caused by flash flooding has also led to supply concerns. Palladium should enjoy its 14th straight session of price increase.
“South Africa produces 40% of world’s palladium and the ESKOM outages are hitting some mines, giving palladium just that extra nudge above $1,900,” said Tai Wong, head of base and precious metals derivatives trading at BMO. “We’ve now had 13 consecutive positive sessions, which seems a little rich, so it wouldn’t be surprising to see some consolidation, though the overall trend continues to look quite positive.”
Silver increased just 0.1% higher to $16.67 an ounce.
“Gold is riding higher on dollar weakness and caution ahead of a looming tariff deadline,” said FXTM analyst Lukman Otunuga. He believes tariffs could lead to gold gains, though the Wall Street Journal reported analysts expect the tariffs to be delayed.
“In the short-term, if the Fed shifts to a more hawkish assessment, gold is at risk from further repositioning. Technically this could pull prices back to $1,410/oz,” UBS analysts noted.