Gold prices rose sharply on Tuesday and still hovered at a one-week high in Asian session trading this Wednesday (7 / March) as a result of controversy surrounding a plan to implement high-duty metal imports by the United States. The plan triggered the threat of counterattack from the EU and a number of other major US trading partners, raising market concerns about a global trade war. However, there are hurdles for further hikes.

Trade War and Stock Market Strife

As commonly happens, investors tend to seek Gold in times of uneasiness as in the situation of many trade war rumors. The plan of applying high metal import duties by the US to be the forerunner of this matter not only caused the anger of another country, but also rejected by some US people. The group of manufacturing companies opposed it because it would significantly increase the cost of raw materials. In fact, one of President Donald Trump's economic advisers is rumored to be resigning if the plan is actually implemented.

Meanwhile, the world stock market crisis that has been going on since early February, has not yet ended. Global stock indices are still moving very volatile this week. The Dow Jones Index rose yesterday, but then the selloff continued again, posting only a 0.04% rise in late US session trade. Pressure on the leading US stock index reflects difficulties experienced by other bourses, including Japan's Nikkei which fell 0.25% immediately after opening this morning.

Induced by chaotic trade wars and stock market turmoil, the price of Gold has risen rapidly on Tuesday, but the pace is starting to slow down today. Gold Futures at COMEX New York rose 0.08% to 1336.8 per troy ounce from today's opening price, while Gold Spot XAU / USD climbed 0.04% to 1335.07 when news was written. Both are still in the highest weekly range, but further gains are likely to be hampered in the 1340 range.

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From a fundamental standpoint, market concerns about the conflict between the US and North Korea have faded. South Korea reported that North Korea has expressed willingness to negotiate to disarm its nuclear weapons if the state-led security of Kim Jong-Un is guaranteed. No further details have been made on the topic, but this is the first peace signal sent by North Korea, having fought with the United States since the inauguration of Donald Trump as US President last year. Looking ahead, rumors surrounding this issue will likely affect the fluctuation of Gold prices.

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