Gold Prices Rise on First Day of Trump-Xi Meeting
Gold prices saw modest gains on Thursday as U.S. President Donald Trump met with Chinese President Xi Jinping, with the results of the meeting likely to have a strong impact on bullion.
Gold prices hit $1,252 as the first official meeting between U.S. and Chinese leadership since the November 2016 election convened at President Trump’s Mar-a-Lago resort in Florida. The talk will likely cover several key issues, including the North Korean threat and trade relations between the two countries.
Advertisement
President Trump repeatedly slammed China for taking advantage of the United States, especially in regards to trade. One of Trump’s trademark campaign promises was to negotiate better trade agreements, with China being considered by Trump as one of the relationships most in need of a reset.
Trump’s bellicose tone on the campaign trail when it came to the possibility of a trade war between the two largest economies in the world had many analysts concerned as to what the fallout would be in such an event. With the two heads of state meeting today and tomorrow, the results of the talk could have drastic implications for trade in both countries.
Gold is often seen as a hedge and risk management asset, and it has seen itself rise and fall in an inverse relationship with the dollar. If the talk between the two countries devolves, the dollar would fall and gold prices would rise.
The continued dovish tone of the U.S. Federal Reserve has also benefited gold prices, as interest rates are expected to remain low compared to forecasts for the remainder of the year. (Source: “Gold Prices to Fall if Trump, Xi Meeting Clears Fed Hike Path,” DailyFX, April 6, 2017.)
Conversely, numbers concerning U.S. employment were positive, showing a low rate of joblessness, signaling a strong U.S. economy and, therefore, tempering gold’s rise.
