Fundamental Comment

Gold Rises Amid Concerns of US-EU Trade War

Gold prices rise

Gold prices rose for the second day in a row on Tuesday, as concerns about the US imposition of new tariffs on $11 billion of EU products prompted investors to resort to safe have bullions.  

The precious metal hit its highest level today at $1302.93 an ounce after opening the session at $1297.43, approaching the highest level in a week that was recorded during Monday's session at $1303.70.

Gold Analysis Amid Change in Investors Sentiment

After a two-week of bearishness in the yellow metal’s prices, the demand returned again to push prices upward to a one-week high.

The U.S. trade representative, Robert Lighthizer, introduced on Monday night a proposal to impose new tariffs on some symbolic European products in retaliation for EU subsidies to Airbus.  

Many analysts claim that the new tariffs are punitive from the U.S. after the EU has provided support to European aircraft maker Airbus for $11 billion, following a US-led sanctions against the company, which is considered U.S. Boeing's biggest rival.

European aids have caused significant damage to Boeing and the trade relations with the United States.

In this context, many traders have boosted their demand on gold amid the negative sentiment and elevating trade war concerns.  

Gold and Dollar

The U.S. dollar fell for a second consecutive session, hitting a one-week low, according to the dollar Index, which hit a bottom at 96.46 after opening at 96.65.  

The slide in the green currency has opened the door for gold to record further gains, as it has become cheaper for non-US dollar holders.

The pressure piled on the dollar yesterday after a report showing U.S. factory orders for February fell by 0.5% from a previous of 0.0%.

Developments in Sino US-China Trade War

The trade talks between the United States and China are still continuing, where the situation seems to be stable. After talks in Beijing and then Washington, the feedback is positive, especially after the spokesman for the foreign ministers in China said the talks had witnessed a great positive development, but he did not go into details.

This stability in the trade negotiations between the two largest economies in the world has been reflected positively on the performance of US stocks during the past period.

The Standard & Poor's 500 index rose for the third week in a row, marking the highest level since October last year at 2895.97 points, and the Dow Jones ended the week's trading at the highest level since October at 26487.57 points.

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