Escalation in the trade dispute - Gold and Bitcoin soar 2

Escalation in the trade dispute – Gold and Bitcoin soar

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Escalation in the trade dispute - Gold and Bitcoin soar 3

With the resurgence of the trade dispute between the United States and China, the price of gold continued to rise. On Monday morning, a troy ounce (about 31.1 grams) of this precious metal cost up to $ 1,459. This is the highest level since May 2013. Calculated in euros, even the highest level since the end of 2012 has been marked. In the previous record of the day, a troy ounce cost 1,311 euros.

Following the announcement of new punitive US tariffs last week, the Chinese currency has depreciated by more than 4% on Monday. For the first time since 2008, a dollar cost more than seven yuan. The yuan rate does not fluctuate freely, but is influenced by China's central bank.

In financial markets, crisis-resistant systems were in demand at the beginning of the week. Gold is also counted for this. In addition, significant cuts in US Federal Reserve rates are expected in the markets. This too is a consequence of the escalation of the trade dispute. The decline in interest rates increases the attractiveness of gold because the precious metal does not generate interest and therefore has a natural disadvantage compared to interest bearing securities. If interest rates fall, this disadvantage is reduced.

Escalation in the trade dispute - Gold and Bitcoin soar 4

Six month gold chart (troy ounces in US dollars)

Bitcoin's digital currency has also increased significantly and has now surpassed the $ 11,000 mark. Early Monday morning, the price on the trading platform Bitstamp climbed to $ 11,676. It was the highest value since mid-July. Last week, bitcoin was traded well below $ 10,000, about 12% lower than Monday. Other digital currencies such as Ripple XRP and Ethereum have also attracted attention.

"It seems that the US Federal Reserve and Donald Trump have helped the crypto markets get out of their summer hole," wrote market analyst Timo Emden. In addition, escalating trade disputes between the United States and China is creating more investment in Bitcoin, Emden said.

Last week, the US Federal Reserve (Fed) lowered interest rates by 0.25 percentage point. Fed Chairman Jerome Powell, however, eased the prospect of further action. However, markets should see the Fed drastically reducing its interest rates as the trade dispute between the US and China intensifies.

With Bitcoin, there are always big price fluctuations. At the beginning of the year, Bitstamp still cost less than $ 4,000. Since then, he has sometimes more than tripled.

With dpa-AFX hardware

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