Gold, close to its record highs amid US- China tensions

The downward opening of European stock markets cut the bullish streak of recent days. 

The geopolitical tensions between China and the US is a warning sign in the markets. The conflict between the two nations overshadowed the beginning of the season, which had reasonably good results. 

In other news, economies around the world hoped for the development of a coronavirus vaccine. 

In such times, gold is seen as a safe bet, and the precious metal is approaching its all-time highs. December gold features traded as high as $1927.1 before pulling back. Gold defended the $1900 level excellently. This indicates that the new highs are probable. The best action for the yellow metal from here on would be stabilization before breaking out to the upside.

China orders the closure of the US consulate

The growing tensions between the US and China are beginning to weigh. 

The US’s closure of China’s consulate in Houston, Texas, was considered a political provocation by Beijing. In response, the Chinese Government ordered the closing of a US consulate in the south-western part of the country. China’s ministry of foreign affairs stated that it had ordered the American office in Chengdu, Sichuan province of the country, to cease all operations.

Along the same lines, Trump has affirmed that the trade agreement with China is no longer so important for the United States. At the same time, Pompeo asked the American allies for a more forceful response against China.

Experts say that the latest weekly unemployment data in the US does not help either. It registered the first rise after 15 consecutive weeks of decline and led the market to question the pace of economic recovery.

Geopolitical tensions have been especially evident in the Asian session. Asian stocks traded significantly lower after US President Donald Trump restricted flights to Europe to slow the coronavirus spread. 

The Shanghai Composite index fell by 3.3%. Hang Seng in Hong Kong traded lower with a 2.2% decline. The Tokyo stock market was missing one more day due to a holiday. Meanwhile, in Australia, the S&P/ASX 200 fell 1.2%.

In this uncertain environment, gold has become an investor’s favorite safe-haven. The precious metal has advanced more than 4% this week, trading at $1,884.3 an ounce. Although it is 0.25% less than yesterday, it has yet to shoot the $1,920 mark, representing its record in September 2011.

In the currency market, the dollar has lost its value.