Rua Gold Inc. (TSXV: RUA, OTC: NZAUF, WKN: H8E)
An Emerging Gold Explorer with Two Highly Prospective Land Packages in New Zealand’s historical gold fields.
The price of gold hit an all-time high of $2,483.73 per ounce on Wednesday as traders bet on an interest rate cut in September and sought safe haven in the precious metal amid growing geopolitical risks.
Now, with only four months left until the U.S. election, gold market analysts expect geopolitical uncertainty to continue to rise. With the attempted assassination over the weekend increasing the odds of a Trump victory, a growing number of commodities analysts believe that gold should do well over the next four years.
Trump has laid out a fairly clear plan for tax cuts and has no intention of easing tensions with his major trading partners, and is also expected to pressure the Federal Reserve to keep interest rates low to support the economy when he takes office. All of this is positive for precious metals as lower interest rates would weaken the dollar, lower taxes would increase the deficit, and increased tariffs would heighten geopolitical tensions.
Trump’s policy stance, which is seen as triggering potential inflation, could weaken the dollar and increase gold’s safe-haven appeal, FX Empire currency and commodities analyst Arslan Ali said in a report this week.
Meanwhile, weekly data released by the U.S. government on Friday showed that hedge funds and other large speculators increased their net-long position in gold as of 16 July to the highest level in more than four years.
Bart Melek, head of commodities strategy at TD Securities, noted in his latest research note that gold prices closed at key support on Friday, with August gold futures last trading at $2,399.10 an ounce, down more than 2 per cent on the day and about 0.5 per cent lower than Friday’s close.
Although downside risks to gold are increasing in the near term, Melek said that now is not the time to be bearish on the precious metal, with technicals, U.S. politics, monetary policy and geopolitics all pointing to the fact that gold will not sustain a significant decline.
Once the market stabilizes and traders confirm that the economic slowdown is enough to justify aggressive easing by the Federal Reserve, gold is likely to test new all-time highs again, he added. Gold will reach higher levels thereafter as institutional investors increase demand for ETFs, bullion and futures returns, continuing to be bullish on gold prices within the year to highs above $2,700 an ounce.
