Investors rushed to gold-baked funds with holdings of precious metal reaching 2,453.4 tonnes last week, amid the US-China trade war and stock market volatility, Bloomberg analyst reported on Monday.
Deposits into exchange-traded funds that are backed by bullion exceeded 100 tonnes in August hitting the highest point since February 2013, according to Bloomberg, with holdings of the metal rising to 101.9 tonnes in the last week of August. With overall gold assets now reaching almost 2,500 tonnes, August was the third straight month in a row where gold stocks have dramatically increased.
Gold gained 19% value this year with the price per ounce, starting at $1522.68 on the morning of Monday, 2 September. The metal reached $1,555 on 26 August, which was the highest price since 2013, while its current value is also likely to advance further, according to Goldman Sachs Group.
The increased investments into the precious metal and its rising prices are likely to be connected to the fresh escalations in the trade war between the US and China, as well as the reluctance of the US Federal Reserve to significantly cut interest rates, boosting demand for gold as a store of value due to its advantages over other volatile global equities.
On 23 August US President Donald Trump took to Twitter to announce a pledge to respond to Beijing’s imposition of tariffs on $75 billion worth of US imports, including the most traded corn, crude oil and wheat. Trump also said that he intends to shut down the operation of US businesses in China.
Our Country has lost, stupidly, Trillions of Dollars with China over many years. They have stolen our Intellectual Property at a rate of Hundreds of Billions of Dollars a year, & they want to continue. I won’t let that happen! We don’t need China and, frankly, would be far....
— Donald J. Trump (@realDonaldTrump) August 23, 2019
....your companies HOME and making your products in the USA. I will be responding to China’s Tariffs this afternoon. This is a GREAT opportunity for the United States. Also, I am ordering all carriers, including Fed Ex, Amazon, UPS and the Post Office, to SEARCH FOR & REFUSE,....
— Donald J. Trump (@realDonaldTrump) August 23, 2019
After the New York Stock Exchange closed on 23 August, Trump declared a new hike on existing tariffs on Chinese imported goods worth 250 billion from 25% to 30% on 1 October. He also raised the planned 10% tariff to 15% on another $300 billion of China’s exports to the US.
The world stock indices failure only contributed to the existing fears of a forthcoming recession in the US, as the presence of the so-called inversion of the US bond yield curve signalled coming economic troubles to experts.
In the meantime, China and Russia became the most eager countries to invest in safe-haven golden assets following the market volatility, with Russia becoming the world’s largest buyer of gold in the first quarter of 2019 with 55.3 tonnes purchased, followed by China increasing its golden reserves by 33 tonnes at the start of 2019. This trend is believed to be a part of the de-dollarization strategy pursued by both states, with Russia also drastically reducing its US Treasury holdings from $160 billion in early 2013 to $10.8 billion in June 2019.
