Donald Trump, the American president, met on Thursday with his Chinese counterpart, Xi Jinping, where the meeting led to the adoption of a number of important decisions, including the reduction of customs duties imposed on China to 47% instead of 57%.
The price of gold reached its benchmark levels during the current month, after crossing the threshold of 4,379 dollars per ounce, before falling back from its high levels during the past few days after trading on the agreement of America and China.
The central banks increased their customers in the third quarter. The Central Bank bought 220 tons of net cash in the third quarter, an increase of 28% from the previous quarter.
Expected blow to gold prices
Mahmoud Najla, Executive Director of Cash and Fixed Income Markets at Al Ahli Investment Company, said that any threat to the global situation, whether between the United States and China or in any other commercial or military conflicts, is a negative signal for gold prices as a safe haven that investors turn to in times of crisis.
He added that during the past period, gold saw a strong rise as a result of the tensions caused by the United States with a number of countries in the world through customs duties, indicating that any easing of these tensions may gradually lead to a drop in the price of the yellow metal.
He explained that at the same time, the decision to lower the interest rate on the dollar represents a new positive support factor for gold, but he believes that the markets are witnessing a situation of divergence in the indicators, as despite the recent reassurance and Washington’s reduction of tariffs on China, confidence is still limited in the stability of the situation.
Nijla pointed out that the markets still behave cautiously, because previous experiences have proven that the security of the situation may not last long, because America often announced the reduction of customs duties and then used to impose them after a short period of time.
He confirmed that this uncertainty is the reason why gold prices did not drop significantly after the agreement between America and China, explaining that in the current state of uncertainty, it is expected that gold will move in the supply range between 3,800 and 4,150 dollars per ounce during the coming period because investors no longer fully trust the global political and economic decisions.
إذاء درماتيكية
Ahmed Al-Mu’ati, the economic expert, said that what the gold market is currently witnessing is “economic madness” due to the illogical and full of foggy movements, explaining that expectations were pointing to a clear drop in gold prices today after the meeting between the United States and China, but the opposite happened and the prices rose, which does not reflect the investors’ view that the results of the meeting were less than expected.
He added that the continuation of the price of gold after the meeting confirms that the differences around the American-Chinese dispute are still in place, pointing out that even if they reach an agreement, the differences will return quickly.
وتعاب: “Even if America and China agree today, they will come back and disagree after a month or two, because each of them seeks to dominate the global economy, so any agreement between them will only be temporary.”
The economic expert pointed out that the general trend of gold is still upward in the long term, confirming that the main factors that support the rise in prices still exist, such as the height of the American debt, which exceeded 38 trillion dollars, the continuation of customs duties, and the direction of the American federal government to reduce interest during the next meetings, even if it was not explicitly mentioned in the last meeting.
Al-Mu’ati explained that the American federal meeting and the meeting between America and China did not present a clear picture of the markets, and that they cannot be described as positive or negative both in the middle, and that the federal government itself made it clear in its statement that the economic forecasts during the next period are uncertain.
And he advised citizens who save their money in gold over the long term to continue doing so because the general trend is still towards the rise, but he cautioned against short-term speculation, saying: “Gold will rise in price over the long term, but I do not advise buying with the aim of quick profit or investing the entire capital in gold.”
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