By Barani Krishnan
Investing.com – Political unrest in Hong Kong and expectations that the Federal Reserve will be forced into another rate cut, with or without pressure from Donald Trump, kept gold in the key $1,500 territory Monday.
Spot gold, reflective of trades in bullion, rose $9.78, or 0.7%, at $1,507.12 per ounce by 2:33 PM ET (18:33 GMT), On Wednesday, bullion hit $1,510.38, its highest price since May 2013.
Gold futures for December delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $8.57, or 0.6%, at $1,517.20. December gold surged to $1,522.35 on Wednesday, a peak not seen since August 2013.
Weekend protests at the Hong Kong international airport reportedly led to the cancellation of all flights, while Beijing said that the ongoing protests are at a “critical juncture” and the violence needs to stop.
According to Chinese state-supported Global Times, China's People's Armed Police assembled in the neighboring city of Shenzhen for "exercises," increasing speculation that Beijing may be preparing to respond with force.
“The news also drove down U.S. equity markets and global bond yields, making gold a more attractive investment,” James Hyerczyk, senior market analyst at FX Empire, said.
Speculation that the Fed will follow the rash of global central banks’ easing after China’s yuan devaluation last week also supported gold.
Trump on Friday called on the Fed to lower interest rates by a full percentage point, saying the nation’s economy was being “handcuffed” by the U.S. central bank’s monetary policy.
“As there are no signs of U.S.-China tensions easing anytime soon, rates could break further lower and, in turn, cause more chaos elsewhere, such as the equity markets and commodity dollars,” said Fawad Razaqzada, analyst at FOREX.com in London.
Headlines on the U.S.-China trade conflict and its potential negative impact on the global economy have provided firm safe-haven demand for gold as markets brace for the Trump administration to implement yet another round of tariffs on Chinese imports on Sept. 1.
“The uncertainty has sent gold soaring and bond yields sharply lower," Todd Salomone, senior vice president of Schaeffer’s Investment Research, said in a note.
Salomone pointed to "heightened concerns that the Federal Reserve will be too slow to adjust" monetary policy to stem the effects of a trade war and slowing world economic growth.