Gold has jumped to new 3-week highs, buoyed by diminished risk appetite stemming primarily from the latest deterioration of trade deal hopes. Stocks are under pressure again today, reaching 1-month lows and boosting the appeal of haven assets like gold.
President Trump indicated that he was in no hurry to cut a trade deal and "perhaps it might be better to wait until after the 2020 elections." In fact, the President also said that he's prepared to proceed with the additional tariffs slated to go into effect on December 15.
Trump has also threatened to impose a 100% tariff on French luxury goods in retaliation for a digital services tax that would adversely impact U.S. companies such as Facebook and Google. The French Finance Minister said the EU "would be ready to retaliate strongly" against the U.S. retaliation. That sounds like a trade war to me...
Providing additional support for gold is new that Indian gold imports surged 78% to 71 tonnes in November, up from 30 tonnes in October. While imports are still 16% lower year-on-year, news that jewelers are rebuilding inventories in the second-largest market for gold consumption is always welcome.
The yellow metal has cleared resistance 1478.81 and is trading back above the 20-day moving average. The next level to watch is 1388.19, which marks 38.2% retracement of the decline off the August high. If this level ultimately gives way as well, the 1500.00/1501.34 level would attract.
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