- Trump cancels the summit with the North Korean leader and says: “the world has lost a great opportunity for lasting peace.”
- Gold jumps on the news which triggers safe-haven flows. JPY and CHF are also in strong demand.
Gold soared almost $14 on Thursday as US President Trump canceled his historic meeting with the North Korean Leader Kim Jong Un originally planned for June 12 in Singapore. Trump decided to call -off the meeting as the rhetoric between the two leaders strongly deteriorated in the last week.
The yellow metal is trading at around $1,305 a troy ounce up 0.90% on Thursday in one of its best daily advance in the last month.
Some analysts argue that this might have been the right move to do in the given context but Trump unpredictability has yielded “few of the dividends he often promises,” according to Dan Balz from the Washington Post. “This episode speaks to the larger issue endemic to the current administration, which is the on-again, off-again style of leadership exhibited by the president on issues across the board, most recently in calling off a trade war with China after multiple threats and loose talk about how winning trade wars was easy,” he further added.
Russian President Vladimir reacted by saying: “Kim Jong Un on his part did everything he promised to do, even blew up some tunnels on their sites and after this, we hear the US canceling the meeting. We in Russia view it with regret because we really counted on this very significant step toward the de-escalation of the situation on the Korean Peninsula and that this will be the beginning to the whole process of denuclearization. We hope very much that dialogue will be revitalized, renewed because without that we can’t hope for any kind of significant progress in solving this extraordinarily important issue.”
The safe-haven demand for gold was further reinforced by the US-China trade talk saga which so far has yielded no agreement. On the contrary, Trump recently announced 25% tariffs on imported vehicles to the US.
Meanwhile, the US Dollar is in correction mode after the FOMC’s minutes didn’t bring any surprises but suggests a rate hike in June as anticipated.
Gold 4-hour chart
“The rally in gold so far was capped by the $1,306 level and also by the 20-day moving average. Above resistance levels might be located at 1,310 followed by 1,318. Today’s rally pushed the price above the 1,300 mark that could become now a relevant support. Below support levels might be seen at 1,291 and 1,285,” according to FXStreet’s own Matias Salord.