Stock markets, gold and oil in the context of the G20 summit

The European markets are picking up the momentum of the weak Asian trading day in particular – the first step is to take cover in view of the G20 summit. Stocks moved lower in Asia, although Wall Street broke its four-day series of losses yesterday. The focus is on the G20 summit and investors are trying to understand any new developments from Japan regarding the trade war between the US and China.

The starting position at the G20 summit

Trump has to understand that he can’t fully succeed, especially in the world’s second largest economy. President Xi, on the other hand, has made it clear that he is ready to talk, but the negotiations should take place at eye level. US Trade Representative Lighthyzer made it clear that no impartial negotiations were possible because of the theft of intellectual property by China.

Market participants hope that both countries will solve their problems and take the opportunity at the G20 summit to set the framework for their future talks on trade negotiations. President Trump has claimed that China wants a deal more than the US. White House economic advisor Larry Kudlow believes that if China fails to meet US demands, pushing for more tariffs is the only way forward.

Gold price remains volatile

Gold prices will remain very volatile in light of the ongoing G-20 meeting this weekend. Traders want to know if there is any reason for optimism in the trade war between the two superpowers – and if the situation does not show any signs of easing, it means the Fed will have to intervene. We expect the gold price to remain above the 1370 support level. Regarding the upside potential for gold the $1450 resistance is substantial and difficult to crack.

After the G-20 US labour market data will be of supreme importance: the Fed’s next move is data dependent.

Oil and G20 summit

As far as the price of oil is concerned, the United Arab Emirates have made it clear that they do not support the United States, which is accusing Iran of recent events. This is a sensible development. If Iran and the United States open the door to negotiations on a new agreement, we expect the price of oil to fall to 54 or even lower.

However, if the outcome of the G-20 meeting shows that Iran has lost the support of countries like Britain and France, this could drive the price higher and WTI could reach the 63 dollar level.

Naeem Aslam is chief market strategist at ThinkMarkets
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