Gold, which is one of the loved and one of the costliest metals in the world, is getting more popular again. Because of US-China Trade War, the gold prices are rising at a high rate. There are two big reasons for this: one is that the United States and China are having problems again, and the one is that the U.S. dollar is getting weaker. Deep Dive into this and learn what is the impact of higher gold prices is on the global level.
Why Are the US and China Fighting Again?
USA and China are both countries which has the world’s largest economy. These are the countries. Both countries are selling a lot of products to each other, for example, computers, cars, clothes and more.
But recently, US has restricted American technology companies and also blocked them from buying certain advanced technology, especially semiconductors and software, from Chinese firms.
In the answer, China is making every effort to stop America from sending its products to their country. These kinds of back-and-forth can make trade more difficult in the future.
Softer Dollars Mean Gold Looks Even Better
Another big reason that the gold price is rising is that the U.S. Dollar is getting weaker day by day.
The dollar is one currency that is used around the world as a currency to buy different products in different countries. But this week, it lost value against other major currencies like the euro and the yen. A weak’s dollars means it takes more dollars to buy a small amount of gold. In Asia, the value of the dollar is falling by up to 0.1%.
The reason for why the value of the dollar weak?, This is because factories in the US are making fewer things, and fewer job openings are available in the country, as per some economic reports in the USA. According to Automatic Data Processing, which reported that the US private sector added 37 thousand jobs in May, which is its lowest level since 2023. These are the signs that made people think that their economy might be slowing in the coming year.
Because the dollar value is currently declining, this also increase in steel and aluminium import tariffs from 25% to 50%.
What Does the Chart Say? Gold May Keep Going Up
In the current time, Spot gold rose 0.6% to $3,370.67, and there were chances that the gold in the future may rise to 0.5% to $3,394.90. And with that, the price of gold is showing signs of getting higher in the coming year. Right now, it is a great asset to invest in as a metal. Because if the gold price is rising now, then it will also rise in the future. As per the charts, countries like India, China and Russia are buying gold regularly as an asset for the future. Now America is trying to reach on the “the right track” they are taking some steps.
What does this Say About the World Right Now?
The world is still in shock after seeing the high price of gold. After seeing the growth of china after COVID, it was not been expected which is expected. In Europe, prices are still on a higher note, and the growth is slow there.
Many people believe the Federal Reserve might cut interest rates by the end of this year in order to help the economy. This has impacted globally in all countries by 2025. Investors are now turning to gold as a safe asset to invest in right now. Central Banks are now increasing gold reserves by hedging against currency risk. On the other hand, the industries that use gold in manufacturing their product are now dealing with higher production costs.
Impact Of Gold Rises Amid US-China Trade Uncertainty
There are many impacts that Indian might face right now because this country is one of the biggest buyers of gold in the world. For Indians, gold is not just a piece of metal, it is a way of investment, a sign of culture and a major asset for females. Here are a few impacts that Indians are going to face in the future:
There are higher chances that the wedding season takes a hit, and families may buy gold less. Because in India, most families live life of a middle-class life so it is difficult for them to buy gold in the price range of 98 thousand INR to 1,00,000 INR.
Then, if the families are not buying the gold, this may hit the gold manufacturing industry a lot. Because gold production only depends on the domestic sales and exports.
India does not produce gold and imports it from outside, and if the prices rise, then it is difficult for them to import it. This is because the import bill may increase, and the current account deficit grows.
Conclusion
The above blog is based on the information present on the internet right now. With the rise price of gold, the price of platinum and other metals may go up to 0.5%. As we mentioned above, there are 2 main reasons for the increased price of gold: one is the China and America trade war, and the one is the Fallout in dollar values. If these two factors continue to happen in the future, then we are going to witness the extreme prices of gold for sure.
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