Precious spot-gold surges 2% as traders unsettled on trade qualms

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Precious spot-gold surges 2% as traders unsettled on trade qualms

On Monday, the 5th of August 2019, spot-gold price soared 2 percent to $1,463 per ounce to reach its highest level in more than six years, as a darkened outlook of a yearlong US-China trade abrasion entering into its second year prompted investors to dump out riskier assets likes of black gold, while a flight-to-safety response of the investors mounted appetite for safe-have commodities such as gold and palladium and currencies likes of Japanese Yen and Swiss Franc.

In point of fact, investors were found to be hurrying on to safer assets, meanwhile ditching out riskier currencies and commodities on Monday (August 5th) after China had sent a formal confirmation that Beijing had set out a crippling ban on US agriculture as an act of retaliation to Trump’s latest 10 per cent tariff hike on $300 billion worth of remaining Chinese imports.

Besides, amid a raft of data displaying steep slowdown on US economy as an aftermath of China trade war, while a free trade treaty with United Kingdom appears to be million miles away and a ratification of USMCA deal would likely to be delayed amid bureaucratic complications, an over-valued American dollar eased on Monday (August 5th), while further head-off of an American currency appears to be staring behind the cards, which in effect may downshift American dollar’s stance and spot gold alongside euro zone currency may replace its place if Federal Reserve pledges to a rate-cut cycle on September’s FOMC minutes, suggested analysts.

According to multiple analysts, four rate hikes last year by Federal Reserve were to blame behind US dollar’s overvaluation and gold’s depreciation despite gloomier trade outlook, while a head trader at the US Global Investors, Michael Matousek said, “What is driving gold is fear of these tariffs and the fear of China retaliating.

“Gold is in a bull market and is going to trend higher. This is just a start of another wave going up. I would not be surprised to see gold hit the $1,500 level by November-December and keep it sustained there”.