Gold and silver rose further on Wednesday, after China said the United States ordered it to close its Houston consulate, signaling a further increase in tensions between the two countries and sparking demand for safe-haven assets.
“Gold attracts flows when real interest rates compress and when political tensions increase, making the current market regime a perfect recipe for a higher movement on the medium-term horizon,” Boris Schlossberg, Managing Director of FX Strategy for BK Asset Management, on a Wednesday note
News about the geopolitical front will surely weigh on risk flows, as concern will grow that “political disputes could hurt the global recovery from the pandemic, especially if the rhetoric becomes more strident as the summer progresses,” said.
Gold for August delivery GC00,
Comex rose $ 8.50, or 0.5%, to $ 1,852.40 an ounce. Based on the most active contracts, prices are trading at their highest level since September 2011. The record intraday level for the most active gold futures is $ 1,923.70 an ounce on September 6, 2011, with the record of settlement at $ 1,891.90 as of August 22, 2011, according to Dow Jones Market Data.
September silver SIU20,
it rose 88.8 cents, or 4.1%, to $ 22,445 an ounce after settling Tuesday at the highest active contract ending since March 2014.
Read:Silver registers the highest finish since 2014 and has risen over 80% since the 2020 low
China’s foreign ministry said it was ordered to close the consulate, which serves much of the South, in what it called an “unprecedented escalation” of the United States, threatening retaliation if the decision is not reversed. The U.S. State Department said it ordered the shutdown to protect American intellectual property and private information, according to media reports citing a brief statement.
China also said Tuesday that it would take unspecified “necessary measures” after the United States government imposed trade sanctions on 11 companies that it says are implicated in human rights abuses in the Muslim region of Xinjiang, northwest of China.
Related:United States Accuses Chinese Hackers of Stealing COVID-19 Investigation of Companies
George Gero, managing director of RBC Wealth Management, said the price of gold offers a “barometer” of our economic and political well-being, and the impact of the pandemic, indicating more investor attention to global concerns, including the escalating tensions between the US and China
“We are near nine-year highs in gold because investors everywhere look, more stimulus, more debt, more worries abound, resulting in gold and silver buyers to act more decisively,” he said in a comment. send by email.
Gold had already found support in expectations for an additional round of US fiscal stimulus, believed to contribute to the potential for further weakness in the US dollar. A weaker dollar may be favorable for products that are priced at one unit, making them cheaper for users of other currencies.
Silver, meanwhile, has risen more than 13% so far this week, and analysts say the metal was behind on gold.
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Among other Comex metals, copper was the only decline, with the September HGU20 contract,
it fell 1.8% to $ 2.9045 per pound. Platinum October PLV20,
added 1.3% to $ 931.50 per ounce and palladium for September PAU20,
increased 0.6% to $ 2,200.60 an ounce.
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