Gold rose on Tuesday as uncertainty over the U.S.-China trade dispute and investors fled to safe-haven assets. The Japanese Yen may strengthen further if trade tensions continue to escalate.
U.S. President Donald Trump on Monday predicted a trade deal with China. He cited what he described as increasing economic pressure on Beijing and job losses in China. Trump’s comments sparked a wave of so-called risk-on trades, initially boosting the dollar and weakening safe-haven currencies.
But then Beijing did not confirm reports of a phone call between the two sides. So, doubts crept in and drove inflows into the safe haven assets.
Washington announced last week an additional 5% duty on $550 billion in targeted Chinese goods. This came hours after China unveiled retaliatory tariffs on $75 billion worth of U.S. products.
Oil prices have fallen by about 20% from 2019 highs reached in April. This was partly because of worries that the U.S.-China trade war is hurting the global economy, which could dent demand for oil.
START TRADINGForex – Investors fled to safe assets on trade war concerns
The dollar index, which tracks the dollar against six other currencies, was down 0.2% at 97.919.
The Japanese Yen was last up 0.3% at 105.755 against the dollar. That wasn’t as strong as Monday’s gain, when it reached a three-year high. The yen has gained 3.5% against the dollar this year as the trade war drives traders to safe-haven assets.
The euro was trading at $1.1103. Forex market participants looked for signs of whether talks between Italy’s Five Star Movement and the Democratic Party would result in the formation of a coalition government.
Sterling was up 0.4% at $1.2268 and by the same amount against the single currency at 90.51 pence. Britain’s opposition Labour Party leader said he would do everything necessary to prevent a no-deal Brexit.
Supporting gold, the dollar eased 0.2% on Tuesday, making the metal cheaper for investors holding other currencies. Gold rose on Tuesday as uncertainty over the U.S.-China trade dispute kept investors on edge. Silver jumped nearly 2% to hit $18 an ounce for the first time since early September 2017.
In commodities, oil prices rose after U.S. President Donald Trump predicted a trade deal with China following positive comments by Beijing. This calmed concerns raised by an earlier round of tit-for-tat tariff hikes.
Brent crude was up 39 cents, or 0.7%, at $59.09 a barrel by 1220 GMT, after falling 1% in the previous session. Tuesday’s slide was the third daily decline in a row. U.S. WTI crude were up 57 cents, or 1.1%, at $54.21, after a 1% fall on Monday and heading for a fourth daily decline.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money