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Gold Price Rises Sharply On Doubts Over US-China Trade Deal

Olga Robert

Mirroring global markets, gold prices in India remained high on Wednesday as doubts arise on truce between the US and China.

Gold futures on MCX rose nearly 0.5 percent to as high as Rs 38,450 per 10 grams, while silver futures climbed nearly one percent to Rs 44,950/kg.

Spot gold was near its one-month high at $1,478.81 an ounce.

The surge comes as Trump's comments on Tuesday tumbled the stock markets causing traders to seek resort in the safe-haven metal. American president Donald Trump on said "I have no deadline," as he answered reporters in London when asked if he wanted an agreement by the end of the year.

Stocks in the European and US equity markets fell as Trump's comments indicated no urgency to reach a deal by 15 December, a deadline that was earlier indicated by US Commerce Secretary Wilbur Ross on Monday.

Trump signalled that he would be willing to wait for another year before striking a trade agreement with China, re-igniting doubts on the likelihood of a phase-one deal by the end of 2019.

Last week, Trump signed two bills into law to preserve Hong Kong's rights and autonomy. The US House of Representatives also approved a bill that would require Washington to toughen its response to Beijing's crackdown on its Uighur Muslim minority.

On Monday, in response to the Hong Kong bill, China said that it would suspend visits to Hong Kong by American warships and impose sanctions on several United States-based nongovernmental groups. The spokesperson for the Chinese Foreign Ministry said that the measures were in retaliation to "unreasonable behaviour" on the part of the United States.

These actions have been dimming hopes of a trade deal between the two largest economies in the world even further.

Additionally, the comments came shortly after he slapped tariffs on steel and aluminium imports from Argentina and Brazil.

In times of economic and political turmoil, investors are looking to reduce their exposure to more riskier assets like equity and move towards gold.

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