Trade Pessimism Tilted The Commodities Market

Previously, trade sentiment was still in an optimistic zone after US Economic Adviser Larry Kudlow stated that the US and China were getting close to a possible trade agreement. Furthermore, over the weekend, Chinese state media further reported that Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer, and Treasury Secretary Steven Mnuchin held a constructive phone call discussing intellectual properties and agricultural purchases. 

However, tables turned on late Monday after CNBC reported a change in China’s mood towards a more pessimistic trade deal, according to government sources. China’s focus on further trade negotiations is also facing barriers due to the current impeachment issue in the US. 

As trade sentiments turned sour, investors did not hesitate to dive into safe-haven assets, especially precious gold, which made a remarkable rebound from Monday’s low level up to $15 per troy ounce. The yellow metal was initially falling pass its $1,460 handle before making its way higher above the $1,470 handle. 

On the other hand, the black commodity was widely sold following the reports, with previous confidence towards a possible phase one trade deal and rollback of tariffs now diminished. Oil bulls betting on both sides to substantially lift tariffs on each other, which would ease the manufacturing sector while prompting up global demand for crude oil. Oil prices now fall back into its previous consolidation zone between $56-$57 per barrel. 

Despite different sources providing mixed signals on trade progress into the market, neither US President Donald Trump nor Chinese Premier Xi Jinping had stepped out to provide clarity and confirmation that the current market is lacking. Statements from either one of them are expected to move the market more substantial than the previous impact from the media.

Photo Credit: www.sbcgold.com