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One interesting component of Friday’s activity in the financial markets was the renewed concern about the Chinese and United States trade war deepening. This concern was a primary cause of the’s selloff in U.S. equities. At the same time a dramatic selloff in gold continued disregarding that concern and focusing on strong economic data. As reported by TheStreet, “Stocks ended a rocky day on a sour note Friday following a report that the trade talks between the U.S. and China had stalled. The talk break-down is a result of the two sides not being able to agree on what to negotiate, leading to uncertainty about when the next round of negotiations will take place.” Today the University of Michigan’s consumer sentiment index for May revealed a 15-year high. Currently the sentiment index is at 102.4, versus April’s numbers which came in at 97.2. It appears market participants decided to focus on the positive economic data and disregard the concerns that moved U.S. equities lower. According to MarketWatch, “The Chinese government and state media sent a clear signal to markets Thursday and Friday that it is reluctant to resume trade talks with the U.S., when a spokesman for the Ministry of Commerce called the Trump administration’s moves to raise tariffs last week, and the threat of additional tariffs on the roughly $300 billion in annually imported Chinese so far untouched by new duties, “bullying behaviour,” that has resulted in “severe negotiating setbacks.” This dichotomy of how traders reacted in equities, versus how traders reacted in gold was certainly noteworthy. What is crystal clear is that gold was unable to breach the barrier and resistance at $1300 per ounce after achieving it on Monday of this week and opening near that price point on Tuesday.
 
20/05/2019 10:00:00 AM

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