As trade tensions between the US and China increase again following US President Donald Trump’s executive order that imposes sanctions on Chinese tech companies, gold fell further below $1,300. According to the executive order, companies that are threat to US national security will be banned from using US technology, while US Department of Commerce including Chinese tech company Huawei into its “entity list” raises concerns over trade relations between two countries. China Commerce Ministry spokesman said on Thursday that US should avoid deteriorating further trade relations between the US and China while adding they will take necessary measures to protect legitimate rights of Chinese firms. In the meantime, it was stated that China’s US Treasury bonds holdings decreased in March to the lowest level since 2017.
In an executive order yesterday, US President Donald Trump banned US companies from using tech equipments bought from companies seen as a threat to national security and trade tensions rose again, while gold prices were down on Thursday and upside momentum was seen to be weak.
As of 15:22 GMT+3, spot gold was trading at $1,294.35 an ounce while dollar index was steady at 97.61. US 10-year Treasury yield edged up to 2.382.
OANDA senior market analyst Jeffrey Halley said on Reuters that gold reached a “temporary detente” and momentum for both sides was weak while adding geopolitical issues were already priced in the short term.
US President Donald Trump declared national emergency on Wednesday and made it obligatory for foreign companies seen as a threat to US national security to have government approval before having access to US technology. While US also banned US companies from using tech equipments produced by blacklisted foreign companies, it was stated that Trump administration targeted Chinese tech company Huawei specifically, which has been accused by the US for their spying activity for Chinese government.
Following the executive order, US Department of Commerce included Huawei in its “entity list” and the company now needs US government approval to have access to US technology. This is expected to lower Huawei’s sales since they need some parts and components produced by US companies to continue their production. The measures are announced to take effect soon.
China Ministry of Commerce spokesman Gao Fang stated on Thursday that China strongly opposed other countries to impose unilateral sanctions while adding US needed to avoid further deteriorating trade relations between the US and China. While underlining that concept of national security should not be abused, Gao said China would take necessary measures to safeguard legitimate rights of Chinese firms.
In the meantime, according to Bloomberg, China’s US Treasury bonds holdings declined to its lowest level since 2017 in March. It was claimed China sold small part of its US Treasury bonds worth $10.4 billion and total holdings were down to $1.12 trillion, adding this was the first decline since last November.