In the early US trading yesterday, gold prices pushed to another nearly nine-year high. The yellow metal is not far below the record highs of 2011 when it scored $1,920.70. August gold futures were up $12 an ounce and traded at $1,877.
Several factors are supporting bulls in the precious metals markets. Economic uncertainty creates a safe-haven demand. On the other hand, the US dollar has become weaker, resulting in increased crude oil prices. Also, consumer demand is increasing from China and India that are fuelling the bull runs of gold and silver.
Hopes have increased that the US government will grant another financial aid package to Americans. The Republican members of the Senate released the coronavirus relief proposal with about $1 trillion to send to teg Democrats.
George Gero, a managing director at RBC Wealth Management, stated that there are no quick solutions for the escalating tensions between China and the US. He doesn’t see a quick solution to the global worries that come from increased stimulus and debt. Gero noted that gold and silver are about to hit higher notes.
The conflict between the two biggest economies has intensified. The US’s move to close Houston’s consulate was retaliated by China by closing the consulate in Chinese city Chengdu. According to the Foreign Ministry of China, the US move severely breached international law. It violated the basic norms of international relations and harmed the relationship between the two countries.
Afshin Nabavi, a senior vice president at MKS SA, stated that tensions between China and the US are weakening the dollar. It puts the Middle East in a bad position. Everything is pointing to much higher haven demand. On the other hand, the weaker US dollar is supporting buyers holding other currencies to acquire gold and silver. It also boosts precious metals prices.