Hawaii Six O - Gary Wagner
China is Certainly Unhappy Regarding Recent U.S. Legislation
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Featuring views and opinions written by market professionals, not staff journalists.
Given that it is a holiday weekend with shortened trading hours for gold today, after being closed for Thanksgiving yesterday, the precious yellow metal witnessed a respectable gain on the day. As of 3:20 PM EST gold futures are currently at $1470.40, which is a net gain of $9.60 on the day.
That being said the performance overall for gold this month was tepid to say the least. In fact, the last time gold did so poorly on a monthly basis was in September.
The fundamental events that contributed to today’s gains are the same as events we have been watching for the last six months; the current state of negotiations between the Chinese and the United States in regards to the trade war and the completion of an interim agreement simply called “phase one”.
As reported by MarketWatch, a new dynamic has entered the negotiations which involves the current protests in Hong Kong. “Concerns around trade flared up again Thursday after President Donald Trump signed legislation supporting Hong Kong protesters, a point of contention between the U.S. and China. In response, Chinese officials summoned the U.S. ambassador and called the new law as interference in its domestic affairs.”
On Thursday President Trump signed two bills which had a goal of supporting human rights in Hong Kong. Amongst the signing of these bills the Chinese summoned the U.S. ambassador to protest and issued a warning that the action would undermine cooperation with Washington.
Although President Trump’s signatures were anticipated his actions came at a critical junction during a complex negotiation between our two superpowers that will certainly add new challenges to the trade negotiations which are currently underway.
The Chinese reaction was swift and furious to the actions by the United States. The U.S. ambassador Terry Branstad received notification from the Chinese vice foreign minister Le Yucheng who told him that the recent actions of the United States constituted, “serious interference in China’s internal affairs and a serious violation of international law.” Calling recent actions by the United States “nakedly hegemonic act.” The Chinese vice foreign minister asked the United States not to implement the bills to prevent greater damage to U.S. – Chinese relations.
Trumps response was that he “signed the two bills out of respect for President Xi, China and the people of Hong Kong.” Although both sides have recently expressed that there has been defined and significant progress in terms of reaching an interim agreement, as they attempt to stave off a further escalation of new tariffs that are set to go into effect December 15th. Truly this most recent action could make that accomplishment more difficult to achieve. As such there is renewed concern about the ability for the two superpowers to come to a lasting agreement and create a treaty which both countries will readily sign.
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Wishing you as always, good trading,