On a day when many analysts expected Federal Reserve Chairman Jerome Powell to be in the spotlight, a statement from China stated that they would begin retaliatory tariffs on products they import from the United States, in addition to tweets. in response to the Chinese announcement by President Trump that sent financial markets reeling in the United States.
According to CNN, â € œThe US-China trade war caught up again Friday, with Beijing unveiling a new round of recurring tariffs for about $ 75 billion US goods. China will impose additional duty rates of 5% or 10% on US imports as of September 1, according to a statement from the Chinese Ministry of Finance. The ministry also announced plans to resume the tariffs on US imports of cars and car parts. The tariffs would be 25% for vehicles or 5% for parts, and would come into force on 15 December. The new tariff rates will target 5,078 products, including soybeans, coffee, whiskey, seafood and crude oil. "
President Trump's response was swift with a harsh response that tweeted," We do not need China, and frankly would be far better off without them – Our major US companies are hereby ordered to start looking for an alternative to China "I'm responding to China's tariffs this afternoon."
At the height of the escalation of the trade war was a speech today by Fed leader J. Powell. Chairman Powell gave speeches at Jackson Hole's economic political symposium today, and his global economic outlook was at best daunting. In his words, the global economic outlook has "deteriorated" as he promised to "act as appropriate to sustain enlargement". The tone of his speech today indicated that the Fed would be accommodating through simpler monetary policy. This alone is obviously extremely secretive for the security sea gold.
The combination of these events resulted in a major fall in US equities with the Dow Jones industrial average that plunged over 600 points. Today's events also had the net effect of being very supportive of gold prices, which gained almost $ 30 in trading today. Based on the most active December contract, gold futures are currently set at $ 1536.40. This takes gold to the highest closing price of record this year, and to the highest closing price since April 2013.
The scale of today's multiple events has once again created a perfect storm scenario where we could see gold moving sharply higher from this current price point . The announcement from China on the retaliation of tariffs has taken this trade war to the next level.
It is difficult to realize that it will be a quick resolution as both sides seem to dig deeper. Measures from both sides appear to widen the gap between the two superpowers.
Many analysts including myself have now revised their price forecasts with estimates of $ 1600 per ounce.
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Wish you always, good deal,
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