Gold futures could continue to climb higher amid rising US-China tensions

Gold futures may be down on Tuesday, but with tensions rising once again between the world’s two largest economies the price of the precious metal is trending higher and could see significant gains throughout 2020.

Gold futures are down a touch on Tuesday, but with US-China tensions rising amid the Covid-19 pandemic the price of the precious metal is trending higher and could see significant gains over the coming months.

Gold futures June contract is down a little over 1% at $1707.25 at the time of publication, with the spot price trading at $1713.65 per ounce.

US-China tensions heat up again

Rising tensions between the world’s two largest economies is driving precious metals higher, but also oil too, with Brent crude surging above $35 a barrel, up from $22 at the end of April.

The prospect of an all-out trade war between China and the US began to look increasingly likely over the weekend, after China’s foreign minister, Wang Yi, accused officials in Washington of pushing the two countries towards a ‘new cold war’.

‘China has no intention to change, still less replace the United States,’ Yi said on Sunday. ‘It’s time for the United States to give up its wishful thinking of changing China and stopping 1.4 billion people in their historic march toward modernisation.’

Beijing’s wider relationship with western economies is also coming under increased strain, with the UK government interested in implementing tighter rules to protect weakened British businesses from Chinese takeovers.

Over the weekend, the UK government also announced an emergency review of its deal with Chinese telecoms company, Huawei, which is contracted to build and expand Britain’s 5G networks.

‘Following the US announcement of additional sanctions against Huawei, the NCSC is looking carefully at any impact they could have to the UK’s networks,’ a government spokesperson said.

Gold could hit new highs, says Citi

The upside of a world reeling from the Covid-19 pandemic is that safe haven assets like gold are likely to surge in the coming months as investors shift away from riskier assets like equities.

Bullish sentiment among investors continues to build amid the pandemic, with commodity analysts from Citi believing the precious metal could hit all-time highs by 2021.

‘We think prices are more likely to make a slow grind higher, but generally hold a $1,600-1,700 handle, rather than quickly spike to the $1,850-1,950 area,’ Citi analysts said in a note last week.

In fact, the US-based investment bank said that it sees gold prices pushing as high as $2000 an ounce over the medium term, with demand for the commodity likely to continue to rise amid the macroeconomic and low interest rate environment.

How to trade commodities with IG

Looking to trade gold and other commodities? Open a live or demo account with IG and buy (long) or sell (short) shares using derivatives like CFDs in a few easy steps:

  1. Create an IG trading account or log in to your existing account

  2. Enter ‘Gold Spot’ in the search bar and select it

  3. Choose your position size

  4. Click on ‘buy’ or ‘sell’ in the deal ticket

  5. Confirm the trade

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Trade on commodities

Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1

  • Wide range of popular and niche metals, energies and softs
  • Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
  • View continuous charting, backdated for up to five years

1In the case of all DFBs, there is a fixed expiry at some point in the future.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.