Gold Hits 3-Week High as US-China Trade War Makes Investors Nervous, Will Bitcoin Follow?
- Trade tension has the global markets tumbling
- Gold price rises while greenback stays unchanged
- Will risk-averse investors turn to Bitcoin?
After US President Donald Trump’s threat to impose new tariffs on Chinese exports, global stock markets took a fall. On Wednesday, Dow Jones ended down 1.8%, S&P 500 fell for the fourth session, closing 1.7% lower while Japan’s 225 Index lost 1.5%.
Asian markets are losing the ground as the US president vowed to double the tariffs on $200 billion of Chinese goods on Friday. This is all happening amidst the claims that Beijing is trying to turn back on the trade deal.
Reuters reported the diplomats arrived in Washington late on Friday night with a 150-page draft trade agreement that would blow up the negotiations that took months to come upon between the world’s two largest economies.
“China reneged on a dozen things, if not more … The talks were so bad that the real surprise is that it took Trump until Sunday to blow up,”
Reuters quoted an unnamed source.
“After 20 years of having their way with the U.S., China still appears to be miscalculating with this administration.”
However, a Chinese delegation is still due in the US this week for the trade talks. Led by Chinese Vice Premier Liu He, the trade talks are due to resume on Thursday in Washington.
It has been expected that Wall Street will post fresh losses today on top of yesterday’s rout.
Gold Comes Out The Winner
Amidst the growing trade tension between the US and China, while global markets are suffering, this has turned out to be good for gold.
This is a sign that investors are nervous about the markets and piling into gold in these last few days. Meanwhile, the US Dollar Index remains virtually unchanged.
The yellow metal gained $6 per ounce to $1,290, hitting its highest level since mid-April 2019.
“Given the corresponding sell-off in stock markets over the same period, gold’s positive response is almost entirely due to a rise in risk aversion, owing mainly to renewed concerns over US-China trade spat,”
said Fawad Razaqzada, market analyst at Forex.com.
What About Bitcoin?
The leading cryptocurrency is expected to climb above $6k level and with trade tension between the US and Chian intensifying we might see that happening and even higher. However, it is to be seen if investor’s risk aversion will apply to Bitcoin or they will see it as a store of value opportunity like gold.