Global gold prices rose on Monday, as the dollar weakened on the first day of trading this week. The rise in gold prices and decline in dollar rates during the day was seen in light of the uncertainties surrounding the G20 Meeting, and the Brexit deal between EU and British PM Theresa May. These uncertainties have provided support for gold as a safe haven investment.
The day‘s trades saw spot gold prices go up by some 0.3 percent to reach the cumulative rate of $1,225.78 per ounce. United States Gold Futures also showed an upward trajectory, as they increased by 0.2 percent to reach the price of $1,226.1 per ounce.
The Global 20 meeting in Buenos Aires, Argentina has the attention of investors and finance executives from across the globe, as both Donald Trump and Chinese President Xi Jinping are expected to meet each other at the event. The meetings are being held on the sidelines of the G20 summit, and both the figureheads are supposedly going to discuss the trade war between the countries, and how it has impacted relations.
While officials from other countries want a peaceful end to the trade war between China and United States, they aren’t confident about the meeting resulting in a ceasefire of sorts.
It is the first meeting after a series of trade wars, and it will take many more like this one to decide the fate of national trade between the nations, and the derivatives that remain associated with it.
“We have the G20 meeting coming this weekend and the question is whether the U.S. and China can strike a deal,” commented an analyst from Saxo Bank, Ole Hansen. He further added that gold could benefit anyway because, according to his calculations, the dollar is “coming to the end of its strong phase.”
While the G20 summit looms over all investor decisions this week, it is not the only political development keeping traders hooked. All investors and traders have also kept a keen eye on the political developments made within Europe. The Euro strengthened against the dollar during the weekend, after an announcement on Sunday that the EU had agreed to a Brexit deal. This news coupled with signs of Italy compromising on 2019 budget plans, signaled a growth curve in the rates for the Euro.
“Ahead of the G20, we have plenty of uncertainty that is providing some underlying support – Brexit, which now goes to vote in the UK parliament, and the geo-political event on the Black Sea between Russia and Ukraine,” Hansen added.
Since gold is considered as a safe asset for such triggering political situations, analysts believe that the immediate future of gold rates rests on how the dollar performs, with a weaker dollar making gold more lucrative.
“The rise in gold this morning is primarily being driven by the decline in the dollar,” mentioned Craig Erlam, who is currently a senior market analyst at OANDA in London.