Gold has posted sharp losses in the Tuesday session. In North American trade, the spot price for one ounce of gold is $1212.37, down 0.87% on the day. In economic news, CB Consumer Confidence dipped to 135.7, missing the estimate of 136.2 points. On Wednesday, the U.S. publishes Preliminary GDP for the third quarter, with a forecast of 3.6%.
Investors will be keeping a close eye on the G-20 summit in Argentina later this week. President Trump will meet with Chinese President Xi Jinping, and the stakes could not be higher, given the full-blown trade war between the world’s two largest economies. President Trump has taken a tough line ahead of the summit, threatening to raise the tariffs from 10 percent to 25 percent on $250 billion worth of Chinese goods. If Trump makes good on his threat, we could see sharp volatility in the currency markets, with the U.S dollar likely making sharp gains. However, the unpredictable Trump is known to prefer to reach a deal whenever possible, so his sharp rhetoric could be some grandstanding ahead of his crucial meeting with Xi. If the two leaders can “agree to disagree” and continue talking, investors will breathe a deep sigh of relief.
The Federal Reserve is also keeping an anxious eye on the U.S-China trade war, and there is growing speculation that it will scale back its rate hike plans for 2019. Just a few months ago, there had been talk of up to four rate increases next year, but with the U.S economy slowing signs of slowing down, the Fed could respond with just two or three hikes. A December hike is widely expected, with the CME Group pegging the odds at 79 percent. However, after that, the Fed is likely to remain on the sidelines until at least March 2019.
