GoldPrice.

After trading modestly lower in early action, the gold market has seen buyers step in and the market is now moderately higher on the session. Some of the day’s reversal may be due to investors stepping in to buy the dip, however, the market may also be seeing fresh buying interest picking up today as hopes for a U.S./China trade deal fade.

A Trade Deal Is Not Imminent

Recent weeks have seen rising hopes for significant progress, perhaps even a deal being reached, in the ongoing negotiations between the U.S. and China over trade. Recent optimism appears to have hit the skids, however, as the White House sent the message on Thursday that a deal could be a way off.

According to marketwatch.com, National Economic Council Director Larry Kudlow was dispatched to interview with Fox Business. Kudlow, himself a former TV anchor, came with a clear message: There is still a “pretty sizable distance” before an agreement can be reached.

Kudlow reportedly also suggested that the next trip made to Beijing by Treasury Secretary Steve Mnuchin and U.S. Trade Representative Robert Lighthizer may not even result in an initial draft of an agreement between the two nations.

CNBC also recently reported that a meeting between President Trump and Chinese Leader Xi Jinping taking place before the March 1st deadline set by the two leaders at the G20 meeting is highly unlikely.

It was also reported that current tariff levels may stay intact and may not be increased as previously planned if a deal is not made.

Now What

The ongoing war over trade has had a significant impact on the world’s first and second-largest economies. Weakness has been seen in key areas of both economies, especially in manufacturing. Chinese companies have reported having to lay-off workers, reduce output and lower prices. American manufacturers have also seen the effects of the trade war, with the AP recently reporting on how the war is affecting manufacturers in the foodservice equipment industry.

The longer the war on trade goes on, the more challenging it may get for manufacturers. As the effects of tariffs continue to weigh on these companies, they will eventually have to reduce their workforces, cut output and slash prices-all bad for the bottom line.

Stock investors have become accustomed to dealing with the ongoing war on trade and the negative implications that come along with it. As hopes for a deal on trade receded today, stocks began to sink. The benchmark Dow Jones Industrial Average is down nearly 300 points in early afternoon trade. If no signs of progress are seen in the weeks ahead, stocks could come under further pressure as worries over the global economic slowdown increase.

Market Reaction

The gold market traded slightly lower earlier in today’s session only to see buyers step in to take the market into positive territory. In early afternoon action, spot gold is up $1.67/oz at $1,311.17/oz.

The gold market had been seeing a slight pullback in recent sessions as investors look to digest recent gains. Price action today has again demonstrated that any dips in the market are likely to be bought until proven otherwise. Discussions of a trade deal being a way off have also likely had an impact, as a degree of risk aversion has set in today causing investors to sell stocks.

The gold market is moving higher today despite a slightly stronger dollar index. The market may see further upside in the weeks and months ahead against the backdrop of a global economic slowdown and an increasingly-dovish Fed.