Whether the trade war is finally off or not, gold looks to be going up — according to two analysts on both sides of the equation.
The dip in the gold price caused by China and the US’ detente on trade has lasted all but one day, with futures clawing back losses.
According to Dow Jones wires, gold futures on the Comex exchange gained 1.4 percent in overnight trade to settle at $1,408, almost completely reversing losses from the previous session.
Gold futures shed 1.7 percent on Monday on the back of US president Donald Trump and his Chinese counterpart Xi Jinping reaching an agreement on trade to stall the hostilities (for now).
But according to analysts, the market doesn’t see hope of an overarching end to the trade war any time soon.
“As global slowdown worries are growing,” Dow Jones quoted Edward Moya, senior market analyst at Oanda, as saying.
“The initial trade truce risk-on rally is over, and markets have little to show in hopes of a trade deal getting finalised anytime soon.”
It’s why some analysts see gold upside in the near-to-medium term — but some have also pointed to forecasts that the US dollar could weaken as stimulus for the gold price.
Speaking to Kitco News (video above), Bill Baruch, president of Blue Line Futures, said should the trade war cool off, gold could go up as a result of a weakening US dollar.
“The dollar hasn’t really sold off, and one of the reasons why is that I think there’s a lot of safe-haven tailwinds in the dollar because of the trade war,”
“You’re looking at China being weaker, Europe being weaker, and that’s lifted the dollar. I think if we get progress on the trade war front this week, then we’ll see the dollar sell off.”
This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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