Gold: Trade Tensions Vs Geopolitical Volatility?

Many analysts are making different predictions on whether the price of gold will explode or suffer losses depending on the outcome of the trade war and geopolitics in market volatility. So what’s the bottom line?

Easing of U.S. Trade War With China

According to Georgette Boele, a senior precious metals and diamond analyst at ABN who said in a report which was published on Monday that he foresees that in the coming months the U.S. dollar will rally moderately as trade tensions decrease.

U.S. Dollar a Key Driver in 2018 for Safe Haven Gold

He went on to say that there is a strong negative relationship between the prices in gold and the U.S. dollar.

Why Does This Matter?

An environment of strong equity markets has a tendency to weaken the strength of the U.S. dollar and vice, versa.

Easing of Trade Tensions

In the event of trade tensions easing, gold will come under pressure and will be affected more so than other precious metals, such as palladium and silver.

That’s not all…

Platinum will see less price declines than gold, he said in the report.

In the coming weeks he anticipates gold prices to drop to $1,300 an ounce.

Forecast for the Rest of 2018

Boele’s forecast for gold prices till the end of December 2018 in the most bleak of circumstances is U.S. $1,275 – end of June and from 30th September till year end December U.S. $ 1,250 per ounce.

Heightened Geopolitical Tensions Is the Main Driving Factor

Commodities analyst at Mitsubishi in London, Jonathan Butler thinks that what is happening geopolitically regarding heightened tensions with Syria could potentially see an upside for gold.

Deadly Chemical Attack

The suspected deadly chemical attack on civilians by Syria has received condemnations by the U.S. France and the United Kingdom, who are reportedly considering a potential military response.

Russia has warned the U.S. against using any military response. If the U.S. resort to a military response it could draw in Russia, Iran and all kinds of other countries into a conflict.

As trade tensions ease gold prices are expected to slid, but on the other hand the mounting heightened geopolitical tensions could very well see investors seeking a safe haven in gold.

Spot gold gained 0.4 percent on Tuesday at $1,341.29 an ounce.

U.S. gold futures for June was up 0.4 percent or $5.80 at $1,345.90 an ounce.

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