On Wednesday, gold prices rose by 1% and reached new records.
The rally in the stock market was driven by the demand for assets that are considered safe havens amid the rising trade tensions between China and the US.
Gold’s price rose as investors sought refuge from potential economic consequences of a trade war.
In a recent report, Filip Lagaart said that the calendar might be able to help Gold reach even higher levels.
Market participants also eagerly anticipated the US payroll data, as it could give them further insight into the state of the largest economy in the world.
These factors combined to cause a notable rise in the gold price on Wednesday.
The April COMEX gold contract was trading at $2,898.61 an ounce as of the writing. This is up by 0.8% over the previous closing. The gold contract hit an all-time high earlier that day of $2,898.86.
Trump’s tariffs – China’s response
China responded to US tariffs imposed on Chinese imports with tariffs of its own.
The trade war has been reignited by this series of retaliatory measures between the two world’s largest economies. This is causing major concerns on the global market.
Adding tension to the situation, US president Donald Trump said that he was not in a rush to begin talks with Chinese President Xi Jinping in order to settle the escalating dispute.
The lack of urgency by the US government further complicated matters and raised concerns about a possible damaging and prolonged trade war.
Businesses and consumers from both countries are already feeling the impact of a resurgence of the trade conflict, as fears about further economic consequences loom large.
Analysts are reminded of the trade conflict that took place in 2018, when both countries increased tariffs against each other.
Analysts point out, however, that there are some important differences in the present situation.
Kitco.com quoted Gary Ng as saying, “China is trying to improve its bargaining power.”
COMEX Stocks on the Rise
Trump’s unpredictable tariff decisions fuel further uncertainty which benefits gold as a haven. Carsten Fritsch is a commodity analyst with Commerzbank AG.
COMEX gold stocks increased by over 290 tonnes in just January. According to Deutsche Bank, another 30 tons of gold were added Monday.
At 32.3 million ounces, or just over 1,000 tonnes, they have almost doubled in price since October.
Fritsch stated that the high premium on gold futures traded at the Comex in comparison to spot prices is most likely the cause.
Fritsch says that the COMEX gold delivery market is attractive because of its scarcity.
Gold is more expensive at the Comex compared to other centres of trading. This is likely due to the feared US tariffs on imports.
This post Gold climbs to new heights amid an escalating US/China trade war first appeared on The ICD
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