Market Update: Trade negotiations are on the table once again!
The Gold prices primarily move downward as the market digests the trade agreement with other major economies. One is with Japan, which includes 15% tariffs on Japanese goods in exchange for an investment of $550 billion in the US and opening the market to cars, trucks, rice, and other selected agricultural products. Second, Indonesia also agrees to open the market as well, in accordance with its social media post.
One thing to be aware of is that the US and Japan are now exploring a new offtake agreement for Alaskan liquefied natural gas, while Japan’s rice purchase could be boosted by 75%, as per the White House statement. Even with this positive outlook, the Bank of Japan’s Uchida also vowed to closely monitor the economy.
However, shortly after his re-announcement, Trump also reiterated that he “will only lower tariffs if a country agrees to open its market. If not, much higher tariffs.” Leaving more tension in the room for other major economies that do not comply. And with this statement alone, the gold prices shortly rebounded before continuing their downward trend.
Meanwhile, for the US-EU trade deal, there is some speculation that the EU and US will be closing on potential 15% tariffs on European imports, with some exemptions on some products, similar to what has been done with Japan. But if this fails and Trump continues to threaten the 30%, then the EU will likely reciprocate.
All of these factors caused the gold price to decline last night, and if the majority of the trade deal is agreed upon, then this downtrend would likely continue unless other factors come into play, such as war escalation, the interest rate or Federal Reserve Chair Powell’s resignation/criminality. But the question is for how long?
