Gold prices hit 2 months high as oil prices plunge by more than 1.5%

On Monday, June 3, 2019, the prices of Gold rose to the highest in more than two months while the prices of oil also plunged by 1.5 percent to below $61 a barrel. This is due to the heightened China-United States trade war which has led to worry about a global recession and Washington’s threat of tariffs on Mexico a key oil supplier to the United States.

“Traders are increasingly pricing in a prolonged trade war hitting the global economy,” Jasper Lawler, head of research at futures brokerage London Capital Group told CNBC.

US gold futures rose 0.5 percent to $1,317.50/oz. Spot gold increased by 0.5 percent at $1,312.37/oz at 3.08am GMT, after touching its highest since March 27 at $1,312.60. For the first time since April, the prices of Gold surpassed the key $1,300 level after being stuck in a nearly $20 range for weeks.

Gold which is a safe haven asset is gaining from the trade war between Washington and Beijing as investors are currently pulling out of risky assets like oil and investing in precious metals like Gold.

“Gold markets are under positioned and that’s why we are seeing investors aggressively chasing prices. There are bets getting placed on a more aggressive rate cut, another reason we are seeing prices moving higher,” Stephen Innes, managing partner, SPI Asset Management told BusinessDay South Africa.

Oil price, on the hand, plunged as a result of the ongoing trade war causing fears globally and Washington’s threat on Mexico. As at 08:44 GMT, the price of oil was down $1.03 or 1.7 percent below the price of Friday. Prices had dropped by more than 3 percent on Friday, with May recording the biggest monthly loss in six months. U.S. West Texas Intermediate (WTI) crude futures were at $52.98 per barrel, down 52 cents, or 1 percent.

While this is happening, Lagos is set to host the first ever West Africa gold conference hosted by Nigeria’s first gold refinery, Kian Smith Gold Refinery in collaboration with Noemdek, a Nigeria-based international advisory firm.

The event which is aimed at strengthening West Africa’s gold value chain as well as enabling relevant policies and market infrastructure for the gold ecosystem by positioning Nigeria as pivotal to the sector’s development will bring together 150 critical gold sector stakeholders from over 14 countries.

Themed the “Gold West Africa” conference, the event will help promote a strong West African public and private sector lobby around gold, put the region top of mind in gold mining, refining all that pertains to gold as well as spur economic growth for countries (Ghana, Burkina Faso, Mali, Cote D’Ivoire etc) with gold.

West Africa has a rich gold economy. Previously, gold mining in the region was extensive and valuable and influenced social and economic institutions but the contemporary gold industry has been quite unsatisfactory although it has been thriving. The industry has the potential to unlock the West African region as the gold market centre of Africa.