Tue, 10/30/2018 - 09:50
Safe haven assets received a boost on Tuesday, as simmering trade tensions threatened to boil over once more. US President Donald Trump has stoked fears by claiming he has billions of dollars’ worth of new tariffs ready if no deal is agreed between his administration and China.
Mr Trump said: “I think that we will make a great deal with China and it has to be great, because they've drained our country. And I have $267 billion [in tariffs] waiting to go if we can't make a deal.”
The news caused Gold future prices to inch up to $1,229.30 per troy ounce by 04:30 GMT on the New York Mercantile Exchange, a rise of 0.1%. The precious metal is widely considered to be a beacon of safety in times of market turmoil.
In contrast, more volatile assets such as stocks struggled, with Wall Street closing in the red. The Dow Jones Industrial Average plunged more than 200 points, wiping out a 350-point gain earlier in the trading session. Meanwhile, the S&P 500 fell by 0.6%.
The Chinese Yuan also suffered in early trade on Tuesday, sinking to a near two-year low. It inched closer to the key level of 7.000 CNY per US Dollar, while the USD/CNY pair moved higher to 6.9699 by 03:30 GMT, a rise of 0.2%.
CNY has been under continuing pressure in recent months and has dropped by 9% since April. Chinese media said this week that its currency is unlikely to weaken beyond the 7.000 USD mark.
Both the US and Chinese presidents are expected to be in attendance at next month’s G20 summit in Buenos Aires where they could arrange to meet. Mr Trump claimed he was ready to make a deal now, but that China was not. He did not elaborate further.
For their part, the Chinese government has said that communications have been ongoing at all levels to try and find a solution. Its Foreign Ministry spokesman, Lu Kang, said: “If the United States is not willing to promote win-win cooperation with China then China is fully confident in being able to continue with its reforms and develop itself.”
President Trump has long-threatened to slap additional levies on all remaining Chinese imports into the US, if Beijing does not meet his demands for reform. He has insisted that China makes sweeping changes to its trade practices, technology transfer and industrial subsidy policies.