Gold starts this holiday-shortened week under modest pressure, establishing a new 9-session low. However, the range established in the previous two-weeks remains intact even as trade deal optimism is back on the rise.

China said over the weekend that it would increase the penalties for the theft of intellectual property. This has been a significant sticking point in negotiations, so Chinese movement on this issue has encouraged markets and eased risk aversion.

However, the struggle to come to terms on a small Phase 1 deal suggests just how difficult it will be to reach a broader Phase 2 agreement. While the optimism pendulum may have recently swung in favor of a Phase 1 deal, Phase 2 is likely to remain elusive.

President Trump suggested on Friday that he might veto the Hong Kong Democracy Act as a means to pave the way toward that Phase 1 agreement. Not surprisingly, the President is getting some flack for that statement and given the broad bipartisan support of the legislation in Congress, such a veto might easily get overridden.

“We have to stand with Hong Kong, but I’m also standing with President Xi.” – President Donald Trump 

Over the weekend, prodemocracy candidates won major victories in Hong Kong district council election. This election was widely seen as a referendum on the democracy movement in Hong Kong, suggesting there is indeed broad support among the citizenry.

The results send a clear message to Hong Kong Chief Executive Carrie Lam; and to Beijing as well. How Beijing takes that message is very much in doubt. Arguably, it might be the pretense for heightened intervention in the semi-autonomous city.


Non-Reliance and Risk Disclosure: The opinions expressed here are for general information purposes only and should not be construed as trade recommendations, nor a solicitation of an offer to buy or sell any precious metals product. The material presented is based on information that we consider reliable, but we do not represent that it is accurate, complete and/or up to date, and it should not be relied on as such. Opinions expressed are current as of the time of posting and only represent the views of the author and not those of Zaner Financial Services LLC, unless otherwise expressly noted.