Gold prices are very sensitive to geopolitical turmoil and the monetary policies of major economies. The September 11 terrorist attack in 2001 drove gold prices up, as did the quantitative easing policies of the US Federal Reserve following the global financial crisis in 2008.
Trump’s plan to build a wall on the border with Mexico and his ban on Muslim immigration triggered strong protests in the United States and led to a drop in global markets and the greenback. The lingering risks of a US trade war against China will add further turbulence to financial markets.
“Trump is a special factor for the rise in gold purchases, but China had started to diversify its foreign reserves long before, increasing its holdings of non-US-dollar currencies and gold, and also increasing holdings of other strategic assets, such as oil,” said Tan Yaling, the head of the China Forex Investment Research Institute.
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