Gold prices firm with US-China trade tensions in focus

Gold prices firm with US-China trade tensions in focus

Even the USA government has filed plans to raise tariffs about $200 billion worth of Chinese imports by 10% to 25 percent Friday.

Data released Thursday showed the US goods trade deficit with China shrank to its smallest level in five years in March, which could further embolden Trump as he escalates the trade war with Beijing.

June Comex gold futures may be underpinned throughout the session on Friday, but prices may not move much if money leaving the stock market continues to flow into the Japanese Yen and U.S. Treasurys for protection.

US President Donald Trump speaks during a rally at the Aaron Bessant Amphitheater on May 9, 2019 in Panama City Beach, Florida.

The world's top two economies on Thursday were due to resume fraught trade talks just as a truce between them verged on collapse, with hostilities poised to escalate after months of seemingly collegial negotiations.

The two sides have already imposed tariffs on billions of dollars worth of one another's goods, creating uncertainty for businesses and weighing on the global economy.

Negotiators will meet at 5pm EDT (2100 GMT) on Thursday, Trump said.

Hours before China put the USA on notice that they would take retaliatory action if necessary, White House press secretary Sarah Sanders told reporters that the administration had been told that Beijing still wants to make a trade deal.

"We need a positive resolution of this ongoing tariff dispute, not further escalation of tensions", he said in a release posted on the ASA web site. Their sensitivity has its origins in the treaties that Western powers, including the United States, forced a feeble Qing Dynasty to accept following the First Opium War in the 1840s. "The Ambassador and Secretary then had a working dinner with Vice Premier Liu He, and agreed to continue discussions tomorrow morning at USTR", White House deputy press secretary Judd Deere said in a statement Thursday evening.

"We hope the United States can meet China halfway, take care of each others' concerns, and resolve existing problems through cooperation and consultations", he said.

The tariffs would target chemicals, building materials, furniture and some consumer electronics among other goods. All of these countries retaliated with tariffs on USA goods.

The S&P 500 index fell 4.63 points, or 0.2%, to 2,879.42. Boeing Co, the single largest US exporter to China slipped 0.5%, while chipmakers, which get a large chunk of their revenue from China, also declined.

Shares of chipmakers, which get a large portion of the revenue from China, continued to slide, with the Philadelphia semiconductor index ending 1.2 per cent lower.

While China's overall economic growth has remained steady so far this year, the outlook for exporters has been challenging. While nearly no cars are imported from China (GM imports a small number of smaller SUVs that it makes in China), a good number of vehicle parts are, which will increase the cost of making trucks and SUVs in the United States. Various media accounts indicated the Chinese side had balked at USA demands that Beijing codify the seven-chapter agreement in Chinese law and publish the text of the agreement or indeed had sought to weaken most of its core elements. Hong Kong's Dangle Seng lost 1.6% to 28,549.70, while the Shanghai Composite shed 1.0% to 2,862.98. "The effects on business confidence and financial markets around the world could be more significant, potentially adding to reasons for renewed policy loosening".

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