Gold Surges As Recession Fears, China-Taiwan Tensions Prompt Risk Aversion

As geopolitical tensions rise as US-China tensions rise and demand for safe-haven assets rises, investors have turned their eyes to gold, which traded near a one-month high on Thursday and headed for its third consecutive weekly gain.

Why is gold rising?: China retaliated to the US House Speaker by firing a live missile near Taiwan on Thursday Nancy PelosiVisited the island. In times when risk aversion is prevalent, investors gravitate towards safe assets like gold.

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At the same time, rate hikes around the world by central banks, which are keen to tackle inflation, are fueling recessionary fears. The Bank of England raised the policy rate by 50 basis points, the most since 1995. The Central Bank of India also, climbing Its policy rate by 50 basis points. As fund managers move out of risky assets, a portion of fund flows appear to be attracting gold.

price movement: Spot gold was trading near the $1,790/oz level on Friday, breaching the $1,794/oz mark, the highest intra-day level since early July.

Expert Tech: Gnanasekar ThiagarajanDirector here Commtrendz Risk Management Services said Bloomberg Safe-haven demand is supporting gold ahead of US non-farm payrolls data.

“It can get a little slick next to the data. Admitting recessionary central banks are also boosting sentiment for the precious metal, which has been under pressure from rising yields,” he said.

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