Gold price up as pressure builds on US-China relations

Marco Green
May 24, 2020

Gold rebounded on Friday as ongoing concerns about the economic fallout of the covid-19 pandemic were compounded by fears of rising political tensions between China and the US.

USA gold futures for June settled up $13.60, or 0.8%, at $1,735.50 per ounce after China's ruling Communist Party set in motion a controversial national security law for Hong Kong that could be a major blow to the city's freedoms. USA gold futures were up 0.9 percent at $1,736.65. However, later in the evening there were reports that the Chinese authorities have announced plans to toughen Hong Kong's legislation on national security.

United States senators later responded by introducing a bipartisan bill that would sanction Chinese officials and organizations that enforce the new security measures in Hong Kong.

The bipartisan legislation would also impose secondary sanctions on banks that do business with entities found to violate the law guaranteeing Hong Kong's autonomy.

Tensions between Washington and Beijing began to intensify early, when early in the week, the Senate approved a bill to prohibit to stock exchange listing in the US for Chinese companies that are not audited in accordance with USA legislation, the White house issued a strong anti-Chinese statements, adds Sberbank CIB.

China warned that it will safeguard its sovereignty, security and interests, and threatened countermeasures.

"It's hard to say whether we will be able to make new highs given the stock market strength, and the endless sideways price action over the past few months".

Meanwhile, physical gold demand picked up in top Asian hubs this week as economies eased lockdown measures and investors continued to buy gold as a hedge against a deteriorating economic backdrop.

Other reports by Click Lancashire

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