Gold Prices Surge to New Highs Backed by Global Economic Worries


Many analysts across the world have predicted that 2019 is going to be the year for gold. It turns out that this is more than true, as global economic worries have propelled the price of the yellow to multi-month highs. Multiple news announcements today helped surge the price of gold, including U.S.-China trade negotiations that have been troubling the minds of investors for a while now.

While there were other reasons as well that helped ended gold’s price on a high note this week, such as strong technical indicators and indications the fed won’t raise interest rates further, comments from senior Italian politicians alluding to the possible departure from the EU helped keep gold prices high.

Claudio Borghi, chairman of the Italian Parliament’s budget committee and member of the Lega Party spoke at a trade-union meeting in Milan this morning. His party, which is now in coalition with the anti-establishment M5s, have expressed anti-EU opinions in the past, and the prospect of another major country departing the union would have drastic implications for the market.

Perhaps the environment would be less toxic if, instead of closing our eyes to Germany’s enormous trade surplus, it respects the rules,” he said. “I think [this May’s EU election] is the last chance…I say we must change the European Union or leave it.”

At the same time, progressing U.S.-China trade talks have helped spur the rise in gold even more. Although the talks taking place in Beijing concluded this week, people involved in the discussions have said there was enough progress made to construct a framework that would potentially lead to an agreement, with President Trump and Chinese President Jinping meeting later to help finalize the a deal.

“The dominant thinking of speculators is that [the] U.S. Federal Reserve is on the very verge of easing monetary policy. Generally, this view is built on belief that [the] U.S. economy is about to fall into a recession this year,” said Ned Schmidt, editor of the Value View Gold Report according to MarketWatch. He added that it “does not matter whether or not any of the above is true,” rather as long as speculators believed, gold will respond accordingly. Precious metals generally respond to well in low interest-rate environments, while rising rates make gold less attractive who chose to chase higher returns elsewhere.

The White House release a formal statement on Friday, confirming that hard discussions took place but progress was made and that the two sides will continue negotiations next week in Washington. Should the deal fall apart before March 1st, U.S. duties on $200 billion worth of Chinese imports will rise from 10 percent to 25 percent. However, others suspect President Trump will make an extension should progress continue to be made.

A number of analysts expect the price of gold to increase well into the $1,400 range by the end of this year, with some speculating it could breach the $1,500’s. Frank Holmes, CEO of US Global Investors (NASDAQ: GROW) is one of them, adding that the price increase will affect other minerals as well and help out the junior mining sector significantly.