Gold prices have finally clocked a significant pause on their historic run in across the last year and a half, with the upcoming meeting between Donald Trump and Xi Jinping possibly acting as a catalyst for the pause.
Why do I say that? It’s well known central banks have been ramping up physical gold purchases through CY25, especially because of the fact nobody is too sure where the US economy is heading across the next few years. Gold purchases appear to have been selected in favour over US Treasuries, the world’s largest market, in recent history.
No surprise, then, that China has been buying a lot of gold through its central bank(s); this is evidenced by data from The Kobeissi Letter showing that Chinese Shanghai Futures Exchange (SFE) gold warrants have increased +570% YTD – nearly a thirty-fold increase over 2024.
So, now that China (and a myriad of other countries) have boosted the store of wealth that is physical gold over what are ultimately US government bonds, perhaps there’s less urgency to prepare for the upcoming Trump-Xi meeting, given that outcomes could be more positive than expected.
A ‘trade war’ has been simmering away between the world’s two largest economies since January of this year, and arguably through the Biden Administration as well, given that many microchip tariff policies against China under Trump 2.0 have actually been around for a while – Trump’s just re-branded them (which is pretty standard for 4-year-politics.)
Of course, when it comes to gold, retail buyers and whoever else are probably enjoying some profit-taking, too. For anybody who bought right before this dip, Halloween probably came early.
The world now looks ahead to next week’s US-China meeting; it will be preceded over the weekend by lesser figureheads meeting in Korea, that being Trump right-hand-man Scott Bessent, and China’s Premier.
By far, this will be the next big geopolitical macro catalyst that influences the direction of the ASX, or at least, the aggregate psychology of its investors.
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