Gold in for a sustained rally
Published on 27.03.2018 15:51

The gold price has run into some stiff resistance today at around the $1,350 mark as it did in the middle of February and has pulled sharply lower bringing to an end 4 solid days of gains and some predict the fall today is only temporary and the chances of a longer rally are high.

A potential trade war between China and the USA has been the catalyst for gold’s recent run and although the war of words between the 2 countries has somewhat eased, there are plenty of other destabilizing factors that is going to make gold attractive as a safe haven.

"Gold prices continue to ratchet higher as the US dollar weakens despite equity markets rebounding on easing concerns about the likelihood of a trade war between China and USA," said Stephen Innes, head of Asia-Pacific trading at Oanda,

"Realistically there are plentitudes of market turmoil in the making that continue to make gold the go-to place to hedge risk." He added.

One of those risks is the tensions between Russia and the rest of the world which started when British Prime Minister Theresa May expelled 13 diplomats from the UK after accusing Russia of using a poisonous nerve agent in an attempted assassination on British soil.

The US has also jumped o board by expelling 60 diplomats, a much larger number than the UK and now Russia is set to retaliate which many predict will throw diplomatic relation between the respective countries into a tailspin and is likely to support gold.

“Gold is in demand at present not only as a safe haven, but no doubt also as a crisis currency,” said Carsten Fritsch, commodities analyst at Commerzbank.

 “This is because the political conflict between the West and Russia is escalating in response to the poison attack on a former Russian spy and his daughter in England in early March.” He added.

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Andrew Masters

Analyst

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