Progress in US-China 'Negotiations'... Dollar and Oil Prices Rise, Gold Prices Fall

Gold Prices Fall by 2.35% Due to Strong Dollar... International Oil Prices Rise by 3%

"Worst Scenario Avoided" Possibility of Risk Asset Preference Recovery

The news of progress in the first high-level tariff negotiations between the United States and China is causing the value of the dollar and international oil prices to rise. On the other hand, the price of gold, considered a safe asset, has turned downward.

According to Bloomberg News on the 12th, the dollar index, which shows the value of the dollar against the currencies of six major countries (euro, yen, etc.), fell to the level of 100.097 at one point on the 10th, the previous trading day, but then turned upward and is trading at the level of 100.997 at 4 p.m. (Korea time) on this day. The yen-dollar exchange rate is recording 146.95 yen, up 1.093% from the previous session (145.36 yen).

International oil prices are also on the rise. The price of West Texas Intermediate (WTI) crude oil futures for June is trading at $63.12 per barrel, up 3.44% from the previous session ($61.02), and the price of Brent crude oil futures for July is trading at $65.97 per barrel, up 3.22% from the previous session ($63.91).

On the other hand, the price of gold, which had been soaring due to uncertainty and demand for safe assets from the tariff war, is on the decline. The spot gold price is moving around $3,246.47 per ounce, down 2.35% from the previous session ($3,324.63). Spot gold had risen to $3,494.84 per ounce at one point on the 22nd of last month. The perception that the worst scenario was avoided in the US-China negotiations has spread among investors, reducing demand for safe assets and triggering a drop in gold prices.

Dan Ives, an analyst at Wedbush Securities, viewed the outcome of this negotiation as a positive boon, evaluating it as "the best scenario showing that a framework for larger US-China negotiations is on the discussion table."

Michael Brown, a senior strategist at Pepperstone Group, analyzed, "Investors reduced their holdings of risk assets ahead of the US-China negotiations, and since the worst situation was avoided as a result of the negotiations, there will be some reflexive preference for risk assets." He added, "However, there will be a lack of confidence until we hear the specific (US-China tariff negotiation) details," and "There are more questions than answers in the current situation."

Reporter Hyein Lee hey@hankyung.com