Gold Prices Continue To Rise! Here’s why
US Secretary of State Michael Pompeo said Hong Kong is no longer politically autonomous.In the statement he made, Pompeo said, “The USA cannot maintain the privileges it applied before 1997. No logical person can claim that Hong Kong remains highly autonomous today, ”he said.According to some analysts, this stance against Hong Kong can have far-reaching consequences, including visa restrictions for the former British colony and even the threat of customs duties.
“I think the potential of a new trade war with China could trigger a new wave of gold buying,” said Bart Melek, commodity strategist at TD Securities .Phillip Streible, the chief market strategist for Blue Lines Futures, said that the rising trade war tensions will create a short-term fluctuation in the market and help gold maintain its critical support level:
“I THINK GOLD PURCHASES UNDER $ 1,700 WERE EXCELLENT. BECAUSE THERE WERE NOT SO MANY UNKNOWN FACTORS IN THE MARKET THAT INCREASED UNCERTAINTY. ”
While the last move of the US government has created some momentum for gold purchases, Streible; He said there was no big race in the trade war between the USA and China:
“ALTHOUGH CHINA TRIES TO INCREASE ITS POWER, IT REALLY DOESN’T HAVE MUCH COMPARED TO THE USA.”
Other important factors to consider in the price of gold
While commercial tensions will bring episodic volatility to markets, both Streible and Melek said investors should be aware of other broad issues that increase their gold prices.
“The whole world is solving its problems and it will be good for gold,” said Streible.The strategist also explained that deflation will further increase real interest rates and that gold may become less attractive. However, the key point for precious metal will be the response of those who govern state policy to deflation:
“GOVERNMENTS AND CENTRAL BANKS HAVE SAID THEY WILL DO WHATEVER IT TAKES TO BRING ECONOMIC GROWTH BACK TO NORMAL LEVELS. THIS REACTION WILL INCREASE INFLATION AND BRING RETURNS DOWN – SO GOLD PRICES WILL GO UP. ”
At the time of writing, the ounce price of gold is trading at $ 1.723.26 with an increase of 0.81%, and gram gold is trading at 377.45 with an increase of 1.37%.