Gold price remained above its strong support level on Friday at London’s trading session, trading at $1,887 an ounce at the time this report was drafted. The yellow metal has gained 4.2% so far this week, thus putting it within striking distance of the all-time high of $1,920.
Gold bulls’ strength is coming on the basis that the relationship between the world’s largest economies has worsened, as the U.S State department recently ordered the closure of China’s consulate in Houston strengthening concerns that tension between the U.S and China could escalate further. Usually, the precious metal performs well when US-China tensions takes the center stage.
Stephen Innes, Chief Global Market Strategist at AxiCorp, in a note to Nairametrics, explained the geopolitical risks giving gold traders enough gas to push the yellow metal upward. He said:
“Gold nears USD1, 900/oz on USD decline and geopolitical risks; can hit all-time highs, but could hit a roadblock after that milestone achievement.
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“Of late gold has been more enamoured with mounting geopolitical risks, notably US-Sino tensions, which continue to be elevated, with media reports (SCMP, Global Times) discussing how China may respond to the closure of its Houston consulate. Old nears USD1, 900/oz on USD decline and geopolitical risks; can hit all-time highs, but could hit a roadblock after that milestone achievement.
“Overnight some of the big boys ramped paper margins as the $1900 level looked so tantalising while other layered by stops above $1890 but with no joy at the figure, profit takings swiftly set in., gold has been more enamoured with mounting geopolitical risks, notably US-Sino tensions, which continue to be elevated, with media reports (SCMP, Global Times) discussing how China may respond to the closure of its Houston consulate.
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“While Covid-19 makes gold a good hedge on so many levels, not to mention the weaker dollar continues to support gold, as the implications/indication this may have around a possible pick-up in inflation expectations is sending the deflationists and gold bears into hibernation, some of the big boys ramped paper margins as the $1900 level looked so tantalising, while other layered by stops above $1890 but with no joy at the figure, profit takings swiftly set in.”
The precious metal continues to fly higher as recent headlines on global Covid-19 caseloads reached 15 million. Gold could hit the $2,000 price level within a few weeks, as more stimulus hits global financial markets.
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