By Abdul H. Jaffar Not much is moving today as US markets are closed for the Labor day. Earlier in the European and Asian sessions, most of markets felt the jitters as President Trump delivered his Labor Day remarks that “If Biden wins, China will own this country”. In another news, Washington may impose sanctions on China’s biggest chipmaker, SMIC, on the ground of military and national security issues and this does not bode well with markets either in fear of retaliation from Beijing.
Late July, Chinese consulate in Houston, Texas was raided and closed on orders from the Trump administration that contended the consulate was a hub of spy activities by the Chinese government. In retaliation, Beijing ordered the same measure to the US consulate in Chengdu. The growing spat has seen safe haven demands elevated recently with Gold holds steady above $1,900 and upside momentum is still growing. CFTC reports ending Sept 1, showed that gold positions jumped $2.8bn to $45.5bn
At this point, Dollar sell-off is probably running out of gas and market is likely to shift tactics in buying USD dips on profit taking. UBS Long on USD/CAD is still in tact and indeed offered a better risk reward ratio (R) as it dip to 1.3050 levels late Friday. Rising US-China tension might see gold re-test previous high around the $2,080 area which might spur more profit taking from gold buyers.
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RTC Team