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The precious metal will continue to remain firm this week and attempt to breach the $1,800 level amid unresolved tensions, a top executive said.
Spot gold rose to $1,704.99 an ounce during early trade Thursday after slumping to $1,693.33 an ounce a day earlier. The bullion had earlier showed some weakness as global stock markets rallied amid easing lockdown measures.
According to Karim Merchant, group CEO and managing director of Pure Gold Group, the unrest in Hong Kong, coupled with the ongoing trade war between the United States and China, will lend support to gold prices.
“Gold prices are extremely sensitive to the renewed trade war between US and China, along with the volatile situation in Hong Kong, so we expect gold prices to remain firm and continue to test to break at $1,800 level,” Merchant told Zawya.
The yellow metal has so far gained about 11 percent in value since the beginning of the year, rising from $1,582 an ounce in January to $1,758 in May. The prices jumped considerably during the coronavirus outbreak as investors shifted their fortunes to safe-haven assets.
Gold demand
As investors turned to gold, demand for the precious metal inched up to 1,083.8 tonnes during the first quarter of the year, according to the World Gold Council.
“The coronavirus outbreak, which swept the globe during the first quarter, was the single biggest factor influencing gold demand. As the scale of the pandemic - and its potential economic impact - started to emerge, investors sought safe-haven assets,” the council said in a report.
Holdings of gold exchange-traded funds (ETFs) reached a record high of 3,185 tonnes by the end of the first quarter. However, demand for gold jewelry fell to the lowest on record, led by a 65 percent decline in China.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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