PRESS ROOM
Gold could rise to over US$1800oz if geopolitical risks remain elevated
Monday 26th August '19
Gold prices have moved very quickly in the past two months, gaining 14% in that short space of time. Gold’s gains have been consistent with the sudden drop in Treasury yields and rise in demand for safe haven assets. As we highlighted in The gold market reigns supreme, growing tensions between the US and China in the form of both a trade and a currency war have kept the market on edge, thus driving up the demand for safe haven assets. Both the market and the Trump administration appear to have forced the Federal Reserve’s (Fed) hands to ease policy. Market tantrums clearly have influenced Fed’s decision making, with the central bank changing policy course after equity markets faltered earlier this year. The Trump administration’s flip-flopping on the trade front, has also led the Fed to provide an “insurance” rate cut. Fed fund futures indicate that the market expects more rate cuts to come during the course of the year and that is likely to keep US Treasury yields low.