Gold Hits Record High As US-China Relations Deteriorate Further, Bitcoin Crosses $10,000 Mark

As China and the United States forced each other’s consulates to close in key cities, investors flocked to safe-havens, driving gold prices to a record high, while market sentiment remained mixed in Asia on Monday.

Safe Havens, Bitcoin Extend Gains

Spot gold traded a record 1.75% higher at $1,934.9 against the dollar, surpassing the previous peak hit in September 2011. 

Aggressive money printing adopted by central banks since the COVID-19 pandemic is raising fears among some investors of rampant inflation, Reuters noted earlier. This is being attributed to a preference towards safe-haven investments.

Goldman Sachs Group predicted Gold reaching $2,000 levels in the next 12 months, with Citigroup saying there is a 30% chance of that level being reached by the end of 2020, Bloomberg reported. 

Chris Weston, head of research at Pepperstone Group in Melbourne, told Bloomberg, “If we think about real yields and what the Fed is doing, it just suggests to me that it’s a matter of time before real yields continue to trend lower and gold goes higher.”

It is typical for investors to seek non-country specific or other safer assets during times of geopolitical crises. The rise of the yellow metal was accompanied by U.S. dollar falling against the Japanese yen at 105.48. Bitcoin (BTC), which is sometimes touted as digital gold, crossed the $10,000 mark on Monday, a level not breached since June 2. It traded 5.67% higher at $10,237.78 at press time, according to CoinMarketCap data.

The rise in Ethereum (ETH), the world's second largest cryptocurrency after Bitcoin in terms of market valuation, has been even more spectacular, with the asset rising 30% this week. Ethereum traded 6.76% higher at $323.34 at press time. 

Asian Markets Retreat

The markets in Asia were mixed towards the end of their trading sessions. Japan's Nikkei 225 index traded almost flat, down 0.16%, and South Korea's KOSPI was up 0.8%. 

Hong Kong's Hang Seng Index was in the red by 0.44%. Mainland China's Shanghai Composite was up 0.26% and Shenzhen Component was up 0.3%.

Shares in Asia were mainly supported by gains in technology stocks. Taiwan Capitalization index added 2.3% in the day, with Taiwan Semiconductor Mfg. Co. Ltd. TSM mostly trading at the maximum 10% surge throughout the day, after rival Intel Corporation INTC said it was delaying the production of 7nm chips to 2022 at least.

US Futures Suggest Higher Open

The U.S. futures traded higher early Monday. S&P 500 futures were up 0.2%, Dow futures traded 0.17% higher, and Nasdaq futures were up 0.4% at press-time.

Federal Reserve officials are reportedly meeting on Tuesday and Wednesday and it is expected they will maintain a near zero-rate policy, Bloomberg noted.