Despite the fact that trade tensions in the world are increasing, and the global economy is on the verge of a recession, gold remains under pressure.
Apparently, market participants still prefer other defensive assets, like the yen and the US dollar, which reduces the potential for the yellow precious metal to recover its value.
Many investors think that Washington and Beijing may soon make a deal and the trade conflict between the two largest economies in the world will end. However, the hope for this is waning every day. Now Donald Trump will put pressure on Europe.
According to some reports, the head of the White House plans to conclude an agreement with the European Union and Japan, according to which imports of cars from these regions to America will be restricted. This is very bad news, first of all for Germany, since the production of cars occupies an important part in the industrial sector of the country.
According to the experts of the investment bank Morgan Stanley, the next trade conflict with the United States may begin with European partners. Experts believe that the trade war between Washington and Brussels will lead to a reduction in the key interest rate in the United States, from which the yellow precious metal can win. "EU counter-sanctions against American products may be more serious than Chinese ones. Under these conditions, the Fed will be forced to lower the interest rate in order to stimulate the country's economy, and this in turn will lead to a weakening of the US currency. Since the dollar and gold are inversely correlated to each other, the cost of the precious metal will receive support for growth, "said representatives of Morgan Stanley.
The material has been provided by InstaForex Company - www.instaforex.com