As geopolitical tensions escalate over US-China tensions and demand for safe-haven assets grows, investors are turning to gold which traded at near-month highs on Thursday and was heading to its third consecutive weekly gain.
why gold is going up: China fired live missiles near Taiwan on Thursday, responding fiercely to Speaker of US House of Representatives Nancy Pelosiisland tour. At times like this, when risk aversion is prevalent, investors flock to safe-haven assets like gold.
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At the same time, fears of a recession are fueled by rate hikes around the world by central banks that insist on fighting inflation. The Bank of England raised its key rates by 50 basis points, the highest since 1995. The Indian central bank also raised its key rates by 50 basis points. As fund managers retreat from riskier assets, gold appears to be attracting some of the fund inflows.
Price movement: Spot gold was trading near the $1,790/oz levels on Friday after breaking through $1,794/oz, which is the highest intraday level since early July.
Expert grip: Gnanasekar Thiagarajandirector at Commtrendz Risk Management Services told Bloomberg that safe-haven demand continues to support gold ahead of U.S. nonfarm payrolls data.
“It might get a bit choppy before the data. Central banks acknowledging the recession are also bolstering sentiment for the precious metal, which was under pressure due to rising yields,” he said.
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