Gold rose on trade-deal fears early Wednesday and have now leveled off in anticipation of the FOMC minutes which will be released this afternoon.

U.S. President Donald Trump renewed a threat of tariffs on Chinese imports on Tuesday. “If we don’t make a deal with China, I’ll just raise the tariffs even higher,” Trump said during yesterday’s Cabinet meeting, according to Reuters. The two countries have been working toward signing a phase-one trade deal this month.

But trade talks between the two superpowers are in danger of reaching an impasse, according to The Wall Street Journal, which cited former Trump administration officials and others following the talks. The two sides are still divided by core issues such as China’s demands the U.S. remove tariffs and U.S. ones that China will buy farm products, it said.

Meanwhile, the Senate late Tuesday unanimously passed legislation that aims to protect human rights in Hong Kong, where antigovernment demonstrators continued to hold out against police at a college campus early Wednesday, according to The Washington Post.

December gold futures rose 0.2% Tuesday to settle at $1,474.30 an ounce on Comex. Bullion increased 0.4% in the first two days of the week and is down 2.7% so far this month. Gold prices skyrocketed earlier this year as a hedge against uncertainty as the two sides squared off.

One potential wild card for today is the release of minutes from the last meeting of the Federal Reserve’s Open Market Committee (FOMC). These releases garner intense interest from traders in all markets as they look for indications that the Fed will cut interest rates for a fourth consecutive time in December. The CME FedWatch Tool shows a 0.7% probability of a rate hike at the Federal Open Market Committee’s next meeting Dec. 11, while 99.3% predicted no change early Wednesday.

In economic news, China cut its new benchmark lending rate on Wednesday in a widely expected move. While it data released Tuesday, U.S. housing starts rebounded in October, with permits for future home construction jumping to more than a 12-year high. MBA Mortgage Applications are due out Wednesday and initial jobless claims Thursday.

Silver increased 0.7% Tuesday and gained 1% in the first two days of the week, outpacing gold’s rally. The most-active December contract settled at $17.12 an ounce on Comex. It’s down 5.3% in November. Spot platinum and spot palladium were both higher Tuesday.

 

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