Now the trade war between China and the United States is going on, what kind of impact will it have on the gold market? An analysis of the impact of the Sino US trade war on Gold: 'when China and the United States come and go on the issue of tariff increases, the market demand for risk aversion increases, and the international community's confidence in the U.S. dollar weakens, which will eventually push the price of gold to 1400 U.S. dollars per ounce. '
In the first quarter of 2018, the capital market witnessed long-term volatility. Under the panic of the trade war, the fluctuation of gold price is relatively stable compared with the stock market.
The S & P 500 index is volatile, while gold denominated in US dollars is volatile
According to wind financial terminal data, gold price has remained between 1302-1366 US dollars since the beginning of the year.
Gold bull: three factors push gold price to break through 1400 US dollars
Precious metals expert Peter Schiff predicts that gold will break through $1400 an ounce.
In an interview with foreign media, Rick rule, a market veteran with 40 years of commodity trading experience and a well-known gold bull, said that there were three factors that helped gold prices rise.
First of all, if the global trade war breaks out and the three-year bond bull market ends, gold will become a haven for global investors and the price of gold will rise to the highest level in nearly five years.
On April 3, EDT, US trade representatives released 301 suggestions on investigation and taxation to China and solicited public opinions. The proposed list of taxed products will cover about US $50 billion of China's exports, with a proposed tax rate of 25%, covering about 1300 tax number products. According to Rick rule, the trump administration appears to be preparing for a zero sum trade war, raising many investors' concerns.
On April 4, the Ministry of Commerce said that China firmly opposes and will take equal measures of the same strength and scale against us products in accordance with the law in recent days.
On April 5, Trump and some White House officials softened their attitude, saying there was no trade war against China, and the price of gold fell below $1300.
On April 6, the white house suddenly issued a trump statement, considering additional tariffs on China's $100 billion goods.
Subsequently, many departments in China responded strongly. Japan and South Korea ended lower with gold breaking the $1300 mark.
At present, spot gold rose for three consecutive quarters, while exchange fund holdings are about the highest in five years.
Secondly, the international community has an unprecedented lack of confidence in the US dollar, and the basic conditions to support the rise of gold price have been met.
According to Rick rule, the core factors affecting the gold price are inflation and the confidence of the international community in the US dollar, rather than the short-term fluctuation of the stock market.
The continuous high debt of federal government, state government and local governments has a great negative impact on investment and savings, and the international community is more worried about the long-term purchasing power of the US dollar.
According to Rick rule, what is the value of the US dollar backing up? 123 trillion debt!
Third, large scale transfer of gold from various countries to China will accelerate the arrival of the "gold fever".
Under the background of many uncertainties in the future purchasing power of the US dollar, there are two options for each country: one is to continue to increase gold reserves, the other is to increase US dollar reserves.
Gold has a long history as a stored value asset, and its significance is self-evident; now the dollar is beyond description.
The National Bank of Hungary now holds three tons of gold, worth $13 million, stored in London and decided to transfer it to Hungary.
Other countries are following Hungary's example, restoring gold reserves and transferring physical gold to the country. Germany's Deutsche Bundesbank, for example, recalled $28 billion worth of gold that had been stored in Paris and New York.
So what is America's attitude towards gold?
Steven mnuchin, the current U.S. Treasury Secretary, made an unusual visit to Fort Knox, where the U.S. government has stored $200 billion worth of gold. Steven mnuchin also joked that gold is still there! The comments said it might be a little comfort for the Treasury Secretary in the face of the weak dollar.
At the same time, the demand for gold will increase with the increase of income and savings in Asia.
According to Rick rule, gold has never been so important to the international community, and we will witness another 'gold fever'.