Gold to benefit on trade wars
Published on 05.03.2018 15:12

The gold price has had a rough time over the last 2 weeks tumbling around $40 dollars but it seems as if the precious metal has found a new friend that may help push the price higher.

That friend happens to be US President Donald Trump who many believe has started a trade war by slapping tariffs on commodities such as steel and aluminum which has infuriated countries such as China who promise to retaliate by introducing tariffs of their own.

These moves are likely to through the global economy into no man’s land and at the same time benefit gold as investors seek out safe havens to park their money and ride out the storm

"There are fears that a global trade war or protectionist measures will undermine global growth," said Societe Generale's head of metals research Robin Bhar.

 

 "People have wanted gold as a hedge against those looming uncertainties." He added.

The Italian election held over the weekend has also caused a major headache with no party expected to be able to form a majority government which is likely to throw the country into a time of political uncertainty which will affect the European Union as a whole.

The Euro is bound to suffer on such a scenario as investors exit the currency which will also lend support to the gold and is already taking place.

"I think gold prices are up partly because of the uncertainty over the impact of the Italian election on the euro zone," said Ji Ming, chief analyst, Shandong Gold Group.

The material published in on this page is produced by the FIBO group companies, and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC; furthermore it has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Andrew Masters

Analyst

The world of trading has no boundaries
×

Risk warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, your level of experience and preparation of taking risk. The possibility exists that you could sustain a loss of some or of all of your initial investments and therefore you should not risk more than you are prepared to lose. Please seek independent financial advice if necessary.

Important notice
By clicking "Continue" you will be redirected to the website operated by FIBO Group, LTD company registered in BVI and regulated by FSC. Please familiarize yourself with the Customer Agreement through the link. Click "Cancel" to remain on this page.