Gold prices have headed higher this week as the tariff spat between China and the US has escalated, raising the specter of an all-out global trade war. The stock markets are seeing red, but as a key safe-haven asset, gold stands to be a big winner from the current crisis, as nervous investors could snap up the base metal if there is no quick resolution to the current crisis. The Chinese government has fired the latest salvo, announcing 25% tariffs on 106 American products, including soybeans, wheat and some motor vehicles. The value of these US exports amounts to some $50 billion – the same value as Chinese exports which have been slapped with tariffs by President Trump. This represents a significant raising of the stakes, and has the markets worried. China’s deputy finance minister has said that a trade war between the two sides would be a ‘lose-lose’, and few investors would disagree with his diagnosis. However, neither Trump nor Chinese President Xi Jinping has blinked so far, and the crisis shows no signs of being resolved anytime soon. As one US analyst wrote this week, “trade wars are easy to start but hard to stop.”
XAU/USD for Wednesday, April 4, 2018
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