Oil prices ticked higher on Tuesday morning, after US president Donald Trump extended a pause on implementing tariffs on Chinese goods for a further 90 days.
Trump signed an executive order on Monday to continue the truce until 10 November, with Beijing also announcing an extension of its tariff pause for another 90 days on Tuesday.
The truce was set to expire on Tuesday, but this latest extension means the US will maintain its 30% tariffs on Chinese imports and Beijing will hold its 10% levy on US goods.
Oil prices rose following the announcement of this extension, as it eased investor concerns that higher tariffs on China would weigh on the economy and demand for fuel.
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Brent crude (BZ=F) futures climbed 0.2% to $65.84 per barrel at the time of writing, while West Texas Intermediate futures (CL=F) gained 0.2% to $64.10 a barrel.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “There’s more optimism in the air as a tariff truce between the US and China holds, with hopes the global economy will withstand the trade blow a little better. Oil prices have crept higher in expectation of higher demand for energy around the world.”
“A longer-lasting trade deal with between China and the US looks to be on the cards, after Trump granted another extension to talks amid a warming up of relations between the two nations,” she said. “The delay on imposing crippling US tariffs on Chinese goods will be welcome news, especially for American retailers in the run-up to the crucial Christmas season.”
Gold prices held steady on Tuesday morning, as investors awaited US inflation data, due out later in the day.
Gold futures (GC=F) traded at $3,404.70 per ounce at the time of writing, while spot gold rose 0.4% to $3,354.86 an ounce.
The precious metal is considered to act as a hedge against inflation, as when price growth erodes purchasing power, investors tend to look to gold as a store of wealth.
Neil Wilson, UK investor strategist at Saxo Markets, said: “US CPI [consumer price index] data today is the big one as this will drive expectations around the Fed’s next move in September.
“The latest indicator we have is that the headline CPI rate will move up 0.2% on a monthly basis, up 2.8% annually,” he said. “Core CPI will rise at a faster 0.3% clip month-on-month and 2.9% year-on-year.”
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“The report comes ahead of the Fed’s meeting in Jackson Hole on 21-23 August, which will likely set the tone for the September rate decision,” Wilson added. “I feel that at 3% inflation the Fed is not going to cut despite markets pricing about 90% chance of it doing so.”
