The gold price remains firmly above the US $1500 dollar mark in today’s trading session as traders seek out the precious metal as a safe haven on the back of political unrest in Hong Kong and the ongoing trade tensions between the US and China.
Over the weekend, there were major protests in Hong Kong which shut down the city’s main airport and with the situation threatening to spiral out of control some say it is only a matter of time before China intervenes in the unrest and this is likely to bring things to a whole new level.
Hong Kong is known for its financial stability and attracts foreign investment from far and wide and there are signs that the global financial hub is starting to be shunned by investors who are sitting on the sidelines and waiting for this mess to blow over.
The ongoing trade tensions between the US and China also has no end in site and some analysts are beginning to predict a favorable outcome could be some years away which may take its toll on the US economy and force further rate cuts from the US Federal Reserve.
Lower interest rates in the US are always a bonanza for gold.
“Gold prices have increased further as a weaker CNY sparked substantial U.S. and global growth fears. With growth worries likely to persist, gold could rise further, driven by an increased ETF allocation from portfolio managers, who continue to under-own gold. We raise our 3, 6, 12 month gold price forecasts from $1,450, $1,475, $1,475/toz to $1,575, $1,600 and $1,600/toz, respectively,” Goldman analysts said in a note.
“With the U.S. and China taking a harder line on trade, our economists no longer expect a trade deal before the 2020 president election. The depreciation of the CNY led to an increase in ‘fear’, lower long-term U.S. rates, and thus a higher gold price. they added.