Fundamental Comment

Gold rises amid political, economic uncertainty

Gold rises amid political, economic uncertainty

Gold prices rose during Wednesday’s trading, as global political and economic uncertainty gave some support to the precious metal as a safe haven.

As of 07:38 GMT, spot gold hovered around $1,483.35 an ounce, where the precious metal hit the highest level today at $1,485.01 while the lowest level was recorded at $1480.05. 

Trade tensions returned once again as a media report stressed whether China and the United States have reached a genuine consensus on the first phase of the trade agreement.

According to press reports released yesterday, China wanted the United States to eliminate tariffs before it agrees to buy $50 billion worth of U.S. agricultural products.

The sources added that Chinese officials want to buy U.S. agricultural products, but the value of the purchases is unlikely to reach $40 billion under the threat of current tariffs from U.S. President Donald Trump.

Last week, Washington and Beijing have reached a partial agreement, including China's purchase of $40 billion to $50 billion worth of U.S. agricultural products.

Overnight, the US House of Representatives passed a bill that aims to defend civil rights in Hong Kong. In response, China threatened to retaliate if the bill is also passed by the Senate, and made into law.

A direct move came from the People’s Bank of China as it has fixed the yuan at its lowest level in a month at 7.0746 yuan to the dollar, pushing the U.S. dollar 0.25 percent up versus the onshore yuan at 7.0991.

The dollar index, which tracks the performance of the U.S. currency against a basket of six currencies, rose 0.06 percent at 98.06.

As for other precious metals, silver declined about 0.24 percent at $17.343 per ounce. Platinum dropped by 0.25 percent at $887, while palladium rose strongly to reach $1,701.05 an ounce.

Brexit developments

According to press reports on Tuesday, EU and UK negotiators are concluding a draft Brexit deal in Brussels.

As confirmed by two EU officials, Britain and Brussels are close to completing the draft exit agreement with optimism that there will be a breakthrough before the end of the day.

Any draft legal text will depend on whether Prime Minister Boris Johnson believes he has the support of the United Kingdom Parliament.

A summit between EU and UK officials is scheduled for today and tomorrow in search of a breakthrough in the Brexit dilemma.

The pound retreated from a 21-week high hit on Tuesday at $1.2798 to trade lower on Wednesday at $1.2745. 

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