Gold price rallies on Trump’s China remarks
(Updated with US President Donald Trump’s latest announcement)
Gold price rallied on Friday to its highest in a week as US President Donald Trump’s made his official response to the new national security law imposed on Hong Kong approved by Beijing a day earlier.
Spot gold climbed 0.6% to $1,730.03 per ounce by 4 p.m. EST, on pace for a monthly gain of 3%. Gold futures for June delivery also rose 1.0% to $1,730.60 per ounce on the Comex in New York.
BMO Capital Markets has also lifted its long-run gold price forecast to $1,400 per ounce, a 16.7% increase over their previous forecast. In the nearer term, BMO analysts forecast gold prices to average $1,732 per ounce this year, representing a 5% increase.
Meanwhile, Wall Street indices fell lower, while the dollar touched its lowest in over two months, as uncertainties begin to kick in surrounding the latest political rift between the world’s top 2 economies.
“Markets are now strictly focused on the two largest economies and what is likely going to be a long drawn out battle,” Edward Moya, a senior market analyst at broker OANDA, told CNBC.
“You’re going to continue to see safe-haven demand (for gold) because the uncertainty over how the US-China tensions are going to play out is extremely high,” he added.
On Friday afternoon, President Donald Trump held a news conference to address China’s security measures on Hong Kong, where he revoked the city’s special customs status and imposed sanctions on officials in both mainland and Hong Kong governments.
He also announced that the US will officially cut ties with the World Health Organization for the agency’s actions during the early stages of the coronavirus pandemic.
“Even with many economies reopening, the economic status is still quite weak. So with this new geopolitical tension it means the recovery in many parts of the world can take longer, which could lift gold prices,” Bank of China International analyst Xiao Fu told CNBC.
In other precious metals, silver climbed 2.8% to $17.85 an ounce, en route to its best month since August 2013. Both palladium and platinum also saw gains of 1.8% and 1.6% respectively.