Gold Gains as Focus Shifts on US-China Tensions, Economic Fallout From Pandemic
Arslan Butt • 1 min read
At the beginning of a fresh trading week, gold prices are making gains and rising over worries about tensions between the US and China, even as recent data releases highlight signs of weakness in the US economy. At the time of writing, GOLD is trading at a little above $1,760.
After US President Donald Trump signed off on an order extending the ban on Chinese companies like Huawei and ZTE, the phase one trade deal is once again under threat, with the Chinese media reporting possible retaliation over this latest development. Trump has recently expressed unhappiness with the extent of the implementing of the partial trade agreement, sending markets into a height state of worry about the trade war resurging amid the coronavirus crisis.
The safe haven appeal of gold received an additional boost after retail sales in the US fell to record lows for the second consecutive month during April and increased the possibility of a severe contraction in the economy during Q2 2020. As a result of the ongoing pandemic, the US is expected to experience the most severe downturn seen since the Great Depression of the 1930s.
Gold is also making gains over recent comments from the Fed chair Jerome Powell about economic recovery extending well into 2021 and depending on how soon a vaccine against the coronavirus can be ready. Meanwhile, latest government data reveals that Japan’s economy has fallen into recession, with the GDP contracting during Q1 2020, adding to the risk-off mood in markets.