Prospects for the gold price are currently at the mercy of two major economic phenomena, both of which can be traced back to US President Donald Trump.
One is the outcome of the present US-China trade dispute, and the second is the question of whether American interest rates will be cut.
Put simply, a positive outcome from trade talks would bear down on the gold price, while a rate cut could give it a lift, because it would diminish the attraction of dollar assets in relation to gold.
Although off a little this morning, partly as a result of positive noises on the trade front, gold has had a good 12-month run. On 10 April last year, it was changing hands at $1,253.70, and by 10 April this year, three months ago, it was trading at $1,304.80.
One month ago, on 10 June, the price stood at $1,328.60.
Even better news for “gold bulls” comes in the shape of the price chart. The 12-monthly low was back on 17 August, at $1,176.70, while the high was on 25 June, at $1,429.55.
This suggests positive momentum – for now at least.
The dollar, the traditional rival to gold as a safe-haven asset, has also had a positive 12 months against the euro, although its overall gain is currently standing at less than just under four euro-cents. This morning it was down 0.15% at €0.8910, while a month ago it stood at €0.8841.
Three months ago, the rate was €0.8873 and a year ago, it stood at €0.8514.
President Trump has accused China of unfair trade practices and of pirating American intellectual property, both accusations having been denied by Beijing. A resolution to the dispute would be expected to spur world trade, making paper assets more attractive and gold less so.
Meanwhile, America’s central bank, the Federal Reserve, holds its next meeting to fix interest rates on 30 and 31 July. Right up until the end of last year, it had been assumed that the Fed was gradually tightening monetary policy to move away from the emergency rates imposed in the wake of the financial crisis.
From 2008 to 2015, the target range for the official rate was 0%-0.25%. Since then it has been steadily raised to the current range of 2.25%-2.5%, despite the obvious displeasure of President Trump, who has engaged in verbal jibes at Fed chair Jerome Powell.
But with the world economy slowing, the Fed seemed to have a change of heart at the turn of the year and the feeling grew that the next move would be down, not up.
However, as the Fed meeting draws nearer, dissident expert voices are warning that a cut is by no means certain and that, even if it happens, it may be smaller than expected and not repeated for some time.