Gold to benefit on trade wars
Published on 05.03.2018 16:12

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.

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Andrew Masters

Analyst

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