Posted 5th August 2022

Gold Challenges $1,800 as Rising US-China Tensions Boost Metal’s Haven Appeal

gold dollar bullion bar

Gold is ending the week trading close to $1,800 an ounce as the precious metal has found support from rising tensions between the US and China following Nancy Pelosi’s visit to Taiwan as well as fears that major economies are facing recession. 

Yesterday brought confirmation that the Bank of England would indeed raise its benchmark rate by 50 basis points but rather than this prove a negative for gold as rising interest rates typically are, the supporting commentary was the focus with the central bank painting a pretty pessimistic picture of the country’s economic outlook.

Across the Atlantic the rhetoric remains very hawkish with Cleveland Federal Reserve Bank President Loretta Mester reiterating the bank’s commitment to bringing inflation down which may require interest rates to be raised above 4%.

Today’s release of the latest US jobs data will provide the latest indicator of the health of the US economy with the expectation that for now at least the employment picture remains positive. This will give the Fed further scope for future rate rises without risking tipping the economy into recession. In such an environment gold’s upside gains are likely to be capped with $1,800 an ounce an obvious near-term resistance level.

This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.