Singapore Family Office Remains Cautions About Trade Progress

(Bloomberg) -- When it comes to gold, apparent progress in trade talks and investors’ shifting appetite for risk, it may pay to remember Donald Trump’s failed flirtation with long-time U.S. adversary North Korea as a reason for caution, according to bullion bull Taurus Wealth Advisors Pte.

The Singapore-based multi-family office, which has $1.7 billion under management, says while investors are tracking positive signs in U.S.-China negotiations that are spurring equities, the recent history of the U.S. president’s engagement with Pyongyang offers a cautionary lesson.

“I would be cautious on these trade discussions,” Rainer Michael Preiss, executive director for client investments at Taurus, told Bloomberg Television. It “reminds me of the discussions about the United States and North Korea. There is a lot of talk, nothing has really happened. Like North Korea, the China dispute is, in my opinion, more of a cold war than just a trade issue.”

While gold has rallied in 2019 as growth slowed, the trade war bit and central banks cut rates, investors are now following signs that Washington and Beijing are on the cusp of a phase-one agreement. Last year, President Trump held a historic summit with the leader of long-time foe North Korea, Kim Jong Un, but after a burst of rosy headlines that initial meeting failed to pave the way for a meaningful breakthrough. Other unproductive meetings have followed.

“These are still very strategic and very deep issues between the U.S. and China,” according to Preiss, who said there isn’t likely to be “any easy resolution.” The outlook for gold, however, remains positive as the market prices in even lower interest rates and central bank buy more bullion, he said.

Gold for immediate delivery hit $1,557.11 an ounce in September, the highest since 2013, and it’s up 17% this year. Holdings in exchange-traded funds have swelled to near a record as U.S. rates fell. The price was last at $1,504.34.

On Tuesday, the World Gold Council reported that total purchases in the third quarter rose about 3% from a year earlier as increased buying for bullion-backed ETFs offset weaker jewelry consumption.

--With assistance from Tracy Alloway, Krystal Chia and Anand Menon.

To contact the reporters on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net;Yousef Gamal El-Din in Dubai at ygamaleldin@bloomberg.net

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Jake Lloyd-Smith, Alpana Sarma

©2019 Bloomberg L.P.