FxWirePro: Gold in position to rally on either outcome in Sino-American trade negotiations

Deal or no deal!

• The gold is in a position to rally on either of the outcomes.
• President Trump brought the focus of the market on Sino-American trade negotiations this week, when he tweeted last weekend that Chinese imports on $200 billion would see tariff rising to 25 percent from Friday in a rebuke to Chinese attempt to renegotiate parts of the agreement, and added that another tranche of Chinese imports worth $325 billion which at the moment is tariff-free could see tariff imposed to the tune of 10 percent.
• As announced, the tariffs have indeed gone up from 12:00 am Friday and the Trump administration has begun preparatory work for the next tranche.

The yellow metal has gone up in price this week, despite a strong USD, thanks to risk aversion flows. Gold is currently trading at $1286 per troy ounce, higher by $20 from its bottom last week.

The price could move higher in either of the cases,

• A no deal and escalating trade war scenario would see further risk aversion flow to the yellow metal, pushing prices higher.
• A deal with further negotiations would push the USD down, while gold benefits.

The current rally in gold has the potential to push the price to as high as $1316 per troy ounce area. However, big selling orders expected around $1310 area.