Escalating Trade War: Gold Could Soar

The escalating trade war between the U.S and China could see gold soar to $1,400 the highest level in five years, an ounce according to CEO of Sprott U.S. Holdings, Rick Rule.

Sprott US Holdings, a subsidiary of Sprott Incorporated, which is Toronto based has been in operation for 40 years.

Bad for Everybody

On Tuesday following three straight quarters of gains, Spot gold was trading at $1,338 an ounce. In an interview on March 29, Rule said that the import tariffs on steel and aluminium that the U.S. imposed and the tit for tat retaliation imposed by China on U.S. imports could see investors seeking safe havens. He went on to say that people have begun to realise that a potential trade war is bad for everybody in the world, not only in the U.S, and is cause for concern. Rule is scheduled to speak at a conference on Wednesday in Hong Kong.

China Calls for Dialogue

Enthusiasm for gold could be dampened if there is an easing of the China-U.S. trade row. In order to prevent damage to relations, China on Monday urged for talks saying that disputes should be resolved through dialogue.

IHS Markit predicts that by the year-end gold will drop to $1,200 while BNP Paribas predicted at the end of February that with an expected four Fed interest rate hikes in 2018, gold would probably be lower by year end than that at the start of the year.

Analyst at Danske Bank, Jens Pedersen said that since the start of the year gold has struggled to break from $1,310 to $1,360 trading range and it would take a substantial move to push it beyond the current range.

Markets Focused on Next Move

The markets are now focused on the next move by President Trump who is expected to impose fresh tariffs on Chinese imports following China’s tariffs on 128 U.S. products on Monday.

In times of uncertainty and higher market volatility in the markets, traders seeks safe havens such as gold to invest in.

Other Metals

Spot silver fell 0.4 percent at $16.55 an ounce.

Platinum gained 0.2 percent at $930.90 an ounce.

Palladium gained 0.5 percent at $939.30.

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