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Gold Wins In a Currency War – Deutsche Bank

Kitco News

(Kitco News) - The gold market continues to benefit from ongoing trade tensions and could shine even brighter as the threat of a currency war grows, according to one bank.

Trade tensions ratcheted higher after U.S. President Donald Trump threatened Tuesday that his government could still impose tariffs on another $325 billion of imported Chinese goods. Although risks of a global currency war are low, some market analysts do see it as a growing threat

Alan Ruskin, global head of G10 FX strategy at Deutsche Bank, said that gold could be the clear winner in a global currency war.

“With a currency war most likely to be fought on USD/CNY and EUR/USD terrain, one approach would be to steer clear of the direct conflict,” Ruskin said in the report. “By far the most direct and simple way to trade the complexities of a currency war is by going long gold.”

The threat of a currency war has picked up since the start of the month after Trump accused China and Europe of manipulating their currencies in a twitter post.

Since June the gold market has benefited from a weaker U.S. dollar as markets anticipate aggressively loose monetary policy from the Federal Reserve. Currently markets expect the U.S. central bank to cut rates by at least 25 basis-points by the end of the month.

August gold futures last traded at $1,423.30 an ounce, up 0.88% on the day.

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