World Gold Council says US-China trade deal doesn’t answer key questions

The much-lauded phase one trade agreement between the US and China fails to address the key issues and has left markets underwhelmed – which is great news for gold according to the World Gold Council.

Head of Market Intelligence, Alistair Hewitt says the accord is a modest step rather than the huge breakthrough claimed by Donald Trump. The US President said the signing of phase one was momentous remarking, “It just doesn’t get any bigger than this” but the Word Gold Council says equity markets haven’t reacted that way. Hewitt explains, “The “Phase One” deal seems to omit many of the key issues which lie at that heart of US-China tensions. For example, the US will maintain tariffs on around two-thirds of Chinese imports as talks continue on the next phase of a deal. Plenty of questions remain on how some of the thornier issues will be addressed in any further talks. Scepticism remains high… As a result, uncertainty and volatility will likely remain elevated.”

Hewitt points out that gold has been in high demand from investors and central banks as a means of mitigating against that uncertainty, with gold gaining 2% this year. He says, “While the US and China have taken their first step towards trade negotiations, optimism seems fragile as many questions remain unanswered. This should be supportive for gold, as investors continue to look for effective diversifiers in the face of persistent uncertainty and volatility.”