(Kitco News) – Gold will be an attractive safe-haven asset as rising trade tensions weaken the U.S. economy and drag down the U.S. dollar, according to a recent report from Morgan Stanley.
But it’s not the current trade dispute with China that investors should be paying attention to; the banks said that a potential trade war with the European Union is the most significant risk to the economy.
U.S. President Donald Trump has until May 18 to decide whether he will impose a 25% tariff on car imports from the European Union. The deadline comes 90 days after the U.S. Commerce Department said in a study that auto imports pose a threat to American national security.
However, there are some reports that Trump could postpone the decision for another six months — avoiding a two-front trade war — while the U.S. continues to negotiate with China.
“The eurozone’s countermeasures may turn out to be more impactful compared to China’s, which may help explain why last week’s U.S. equity sell-off has especially affected companies with significant non-U.S. revenue streams,” the analysts at Morgan Stanley said in their report released earlier in the week.
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