Yahoo Finance Price of Gold Fundamental Daily Forecast – Supported by US-China Tensions Flare Up
Gold is bouncing back on Friday as an escalation in U.S.-China tensions increased the bullion’s appeal as a safe-haven asset. Despite the early short-covering rally, the precious metal is set to close lower for the week amid an easing of coronavirus lockdowns and some positive economic indicators.
At 10:13 GMT, June Comex gold is trading $1735.80, up $13.90 or +0.81%.
The week started with spot gold touching its highest level since October 2012, however, it gave up those earlier gains and turned lower for the week as more countries began to lift coronavirus restrictions.
On Thursday, gold was pressured by surprise news that showed a slight improvement in the manufacturing activity in Europe and the United States. U.S. Weekly Jobless Claims also showed the downtrend was flattening which suggested to traders the worst was over.
Prices reversed to the upside early Friday as the tensions between the U.S. and China centered on the former’s imposition of a new national security law on Hong Kong after months of anti-government protests in the Chinese-ruled city. Tensions between Beijing and Washington have risen in recent days, over issues such as the coronavirus pandemic as well as a bill that was passed which could force Chinese firms to delist on U.S. exchanges.
The draft law was announced at the annual National People’s Congress (NPC), the Chinese parliament, which kicked off on Friday. The laws would reportedly ban secession, foreign interference, terrorism and all seditious activities aimed at toppling the central government and any external interference in the former British colony, according to Reuters.
Adding to uncertainties, China refrained from setting a 2020 GDP growth target and pledged to step up spending and financing to support its economy, the first time that the Asian country did not set a gross domestic product (GDP) goal since 1990 when the government started to publish such targets, according to Reuters.
Chime Do, head of Greater China Investments at Barings, said short-term traders were mostly concerned with the absence of a growth on Friday. “The market was hoping they would give some kind of number, 2% or 3%, but that wasn’t available.”
Daily Forecast
Once again, gold investors are facing short-term volatility that could trigger a two-sided trade especially if investors start to move funds into the U.S. Dollar.
Longer-term, however, the fundamentals are still supportive for gold due to the tremendous amounts of fiscal and monetary stimulus injected into the global economy.
This article was originally posted on FX Empire
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