Home Forex News Gold Rallies Amid Trade War and Recession Concerns

Gold Rallies Amid Trade War and Recession Concerns

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  • Concerns of a potential rise in coronavirus infections favor gold.
  • Tensions rise between China and the U.S over trade.
  • Gold prices currently at three-week highs.

Gold prices retained their bullish momentum on Friday morning, reinforcing the gains that have prevailed this week. The price of the precious metal has remained largely bullish in the past three weeks due to demand as investors shift from fiat currencies to avoid losses. This is due to the increasing concerns about the possibility of a second wave of coronavirus infections, as well as the renewed trade tensions between China and the U.S.

Analysts expect gold to retain its current bullish momentum and even surpass the above key price points. The price of the precious metal has gained by roughly 1.8% this week. One of the factors that aided the rally was the expectations of another stimulus package to support the economy. This is because investors consider widespread stimulus packages as measures against currency debasement and inflation.

Gold outlook

Gold is also gaining thanks to the renewed concerns about the China-U.S trade war which means that the resulting economic uncertainty may negatively affect fiat currency performance. The coronavirus situation has also aided the increasing demand for gold as investors shy away from risker assets. Major economies such as the UK and the U.S have been planning to reboot their economies by easing restrictions on business activities that had been put in place to prevent the spread of the coronavirus.

Unfortunately, the economic reboot plans have been met with criticism and concerns because there is still no cure for the coronavirus. Allowing businesses to resume operations is good for the economy but it also means more social interactions which will likely contribute to a second wave of COVID-19 infections. This is why investors have been leaning towards gold as a safe haven to avoid the effects of further economic fallout. If the current situation prevails, then the price of gold might continue to surge.

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