Another failure for Trump or just unproductive meeting? Investors are trying to figure this out as president Trump abruptly finished the meeting with North Korea’s leader in Hanoi. Traders were quick in reacting to the news and the gold price moved higher on the back of this. This is because if the US is not ready to lift the sanctions on North Korea, then it means more trouble ahead. We can also say that everything was no short of any stage show.
Simply put, the precious metal moved higher because investors are concerned that the situation between the US and North Korea would become tense again. If the US is not ready to lift the sanctions on North Korea, it is highly likely that the country may go back to its old days of testing rockets. However, we do not think we have reached the same cliff edge yet. This is also because president Trump said: Kim has promised to not test any more rockets. However, there is a big question mark on this statement because of its reliability.
Gold price is still trading above the 1300 mark which is the most critical price level for bulls and bears. I do believe that as long as the price stays above this, the odds are in favor of higher price.
European stocks and US futures are set for another cautious start following a topsy-turvy U.S. session that pushed the S&P 500 finish nearly flat. In the absence of any significant new impetus, the global equity rally is losing steam. The Chinese manufacturing data released overnight painted a very disappointing picture for the markets. The manufacturing number came in at 49.2 which was below the consensus and most importantly this is the third consecutive month that we have seen the reading below the level of 50. Clearly a global economic slowdown is impacting the economy and this is the chief reason that we have not seen any sign of life for the new export orders as well, it plunged to 45.2 from its previous reading of 46.9.
Overall, the flow of news has dampened the sentiment for the equity markets and we think this is going to be the main theme today.