President Donald Trump must believe that the war will be over soon. The White House announced today that he will meet with Chinese President Xi Jinping in Beijing on May 14 and 15. The Iranians responded to Trump's 15-point peace plan today with a list of five conditions, according to Press TV, including reparations, sovereignty over the Strait of Hormuz, and no more assassinations. Interestingly, they didn't claim a right to nuclear enrichment or ballistic missiles. Let's review how the financial markets have been reacting to the war so far:
I. Gold
Everyone is wondering why the price of gold plunged 16% from its record high on Monday, March 2, a couple of days after the war started, through March 23 (chart). It should have gone up on the worsening inflation outlook and mounting geopolitical risks. These are usually bullish developments for gold and should remain so. Perhaps traders perceived that the war would boost global weapons spending, but weapons makers invoice in dollars, euros, and other currencies, not in gold. The war also boosted the dollar's foreign-exchange value, making it a better safe haven than gold.
