Gold may reach $1,400 per ounce as early as this year, as the unfolding trade war between Beijing and Washington inevitably drives investors to traditional safe havens, dragging down the three-decade bull market in bonds, according to the analyst, as quoted by Bloomberg.
Spot gold closed at $1,337.27 per ounce following three straight quarters of gains with exchange-traded fund holdings hovering around their highest in five years.
Last month, the White House announced tariffs targeting $60-billion worth of Chinese exports. Beijing retaliated by imposing its own levies. The Trump administration is expected to turn up the heat as early as this week, with a fresh list of Chinese products to be slapped with duties.
The increasing conflict could reportedly curb demand for US assets amid a growing budget deficit and dollar vulnerability if investors avoid buying the US debt.
“In the 40 years I’ve been involved in the gold market, the most important determinant of the gold price has been international confidence in the US dollar and in particular, the US dollar as expressed by the US 10-year Treasury,” Rule told the agency.
“The fact that the US seems to be bound to engage in a zero-sum trade war has begun to strike people as something that’s bad for everybody in the world, not just the US. The potential for a winnerless trade war certainly gives cause to some concern,” the analyst added.