Gold Moves Higher as Job Losses Fuel China-U.S. Tensions

Gold Moves Higher as Job Losses Fuel China-U.S. Tensions

imageCommodities13 hours ago (May 22, 2020 11:46AM ET)

(C) Reuters.

By Geoffrey Smith

Investing.com — Gold prices rose again on Friday amid signs that relations between the U.S. and China are set to get worse against a backdrop of increasing economic strain on both countries.

China for the first time in 30 years dropped its commitment to a specific growth target, causing concern in world markets that it may not be able to meet expectations that have already been drastically lowered since the coronavirus pandemic struck.

That news came a day after U.S. data showed that nearly 39 million Americans had filed for jobless benefits since the start of a wave of lockdowns in March. It was accompanied by a sharp exchange of words over a new proposal by Beijing to impose greater control over Hong Kong, which the U.S. administration and Senate said would trigger severe repercussions.

By 11:30 AM ET (1515 GMT), gold futures for delivery on the Comex exchange were up 0.6% at $1,732.45 a troy ounce, on course for a decline of some 1.2% on the week. Spot gold was up 0.3% at $1,732.91 an ounce.

Silver futures outperformed again, rising 1.7% to $17.69 an ounce, while platinum rose 2.8% to $890.40 an ounce.

Retail interest continues to bubble after London-based hedge fund manager Crispin Odey gained headlines with speculation that governments may one day move to confiscate private gold holdings – a conspiracy theory beloved of the more extreme section of gold bulls.

Odey said the disruptions to the global trading system that follow from the pandemic may make world leaders seek a reliable unit of account.

His views were dismissed by analysts John Sweeney and Bron Suchecki at ABC Bullion in Sydney.

“With mainstream financial market commentators disdainful of gold as a legitimate part of an investor’s portfolio, any move by governments against gold would be counterproductive as it would send a strong signal that things must be really bad if the government needs to hoover up something it has previously ignored and said is unimportant,” Sweeney and Suchecki said in a morning note.

“It is a high risk strategy with little benefit and it would just result in investors moving into other hard assets to protect their wealth – like silver,” they added.

Elsewhere, the central bank of Venezuela has filed suit against the Bank of England for its refusal in 2018 to release over $1 billion worth of gold from its vaults. The Bank of England has refused because the U.K., along with around 60 other countries doesn’t recognize the regime of President Nicolas Maduro.

Gold Moves Higher as Job Losses Fuel China-U.S. Tensions

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