Gold Prices Rise to $1,326/oz as China U.S. Treasury Buying Report Creates Volatility
The comments above & below is an edited and abridged synopsis of an article by Gold Core
Gold has risen to its highest level in four months as the dollar has fallen, just after a report that Chinese officials have encouraged slowing or halting purchases of US Treasuries.
Spot gold rose 1.2% from session lows of $1,310/oz to session highs of $1,326.56/oz prior to falling back and closing in New York at $1,317.40/oz (currently at $1,341.30).
China is likely to stop buying US Treasuries, and that will have major repercussions for US monetary policy. It will hamper the Fed in reducing its bloated balance sheet, perhaps forcing another round of QE, which would be positive for gold.
Chinese relations with the US are frayed, and President Trump’s aggressive economic and military policies are likely to see a monetary response from China. As China-US relations deteriorate, currency wars will return as China rejects US hegemony in Asia.
The financial and monetary dominance of the US is increasingly at risk. As tensions between the struggling superpower and the emerging superpower deepen, a gold-backed yuan becomes more likely.
If China were to partially back its yuan with gold, it would require a gold price of $64,000 per ounce, 50 times the price of gold bullion today, according to research from Bloomberg Intelligence.