Economy: US-China Conflict Fuels a Gold Rush

The shares of gold mining companies surged this Wednesday, February 5, on Wall Street, fueled by a new historical record of gold at $2,869.68 per ounce. This spectacular rise occurs in the context of a rekindled trade war between Washington and Beijing, pushing investors towards safe havens.

A widespread surge in gold mining stocks

The main gold mining companies listed in the United States recorded significant gains as the markets opened. Newmont and Barrick Gold, the sector giants, increased by 1.1% and 1.3% respectively.

South African miners also benefited from this momentum, with Gold Fields up 2.5%, while Canadian companies Agnico Eagle Mines and Kinross Gold gained 1.3% and 1.7% respectively.

This remarkable performance is explained by the surge in the gold price, which reached a new historic peak of $2,869.68 per ounce at the start of the trading session. The yellow metal is fully benefiting from the fears caused by the escalation of trade tensions between the United States and China.

Analysts emphasize that this trend could continue, as global gold demand increased by 1% in 2024, according to the World Gold Council. The massive purchases by central banks, which exceeded 1,000 tons for the third consecutive year, also support the market.

A rush for gold supported by global uncertainties

The recent escalation of trade tensions between the United States and China has played a crucial role in this rise. Following new U.S. tariff measures, Beijing quickly responded by imposing its own tariffs on American imports. This situation was exacerbated by President Donald Trump’s statement indicating that he was not in a hurry to speak with President Xi Jinping to ease tensions.

Analysts from Heraeus Metals Germany point out that fears of a global recession and rising inflation, fueled by this trade war, are pushing investors towards gold as a safe haven. This trend is reinforced by warnings from three Federal Reserve officials regarding the potential impact of tariffs on inflation.

In conclusion, the rush of central banks towards gold is intensifying amid rising geopolitical tensions. Analyst Rhona O’Connell from StoneX warns, however, that the precious metal shows signs of being overbought, with its relative strength index of 76 significantly exceeding the critical threshold of 70. A short-term correction seems likely, despite solid fundamentals.