Only a few weeks ago the price of gold has floated around yearly minimums. A turnaround has started recently and gold marches back into higher levels. Recurring trade wars between USA and China and increasing investors’ fears push the price of this precious metal into 3-month peak. Since the Chair of Federal Reserve Jerome Powell suggested that central bank may be decreasing interest rates in case of USA economy decline due to trade disagreements, gold has risen just under 1349 USD per 1 ounce – a level where it was traded for the last time in February 2019.
The commodity’s development did not appear promising still at the end of May. Even though White House assured that talks about a new trade deal will continue after import duties on selected goods increase by 10 to 25 percent, markets have been impacted by the news from CNBC, that in the end negotiations will be put on hold. All stock markets have turned red after this information due to fears from trade war renewal. The price of gold has not gone upwards, as one would expect, but decreased into 2-week minimums. Strengthening dollar has pushed it down.
In the second half of May, the yellow metal has dropped from daily value of 1288 USD per 1 ounce by 0.8 percent to a price of 1277 USD per 1 ounce, where is has been traded for the last time at the beginning of May 2019. Several days before that the price oscillated above 1300 USD per 1 ounce after China’s reported “retaliatory” increase of duties imposed on American goods.
The reason for such significant weakening was created by substantial strengthening od US dollar, that has climed onto 2-weeks maximum due to the highest consumer sentiment in the USA in the past year 15 years. It has also profited from European currency value decrease, that has lost due to rising nervousness just before European Parliament elections.
The development of the situation and talks between USA and China, that have been heading in a negative way so far, and Fed’s information have helped the precious metal to use its potential. Investors are currently focusing on gold as a safe haven against further weakening of not only the Chinese economy, but also the global economy due to negative influence of the trade war between two superpowers.