The never ending US-China trade war cause global growth to slow and therefore, central banks around the world to simplify monetary policy. Investors seek assets with stable growth. With this condition, gold has surged above $1,500 an ounce, reaching its highest price since six years. China's central bank expanded its gold reserves for an eight consecutive month in July, causing the metal to increase as much as 2.6% per ounce since 2013. Not only that, the price of silver is also predicted to rise above $17 for the first time since June 2018. According to Wayne Gordon, executive director for commodities & foreign assets at USB AG's wealth management unit, a further escalation of the trade fight triggers Gold's price, as a safe-haven commodity to go as high as $1,600. The flight of capital from securities to haven assets has on the other hand dampens the performance of stock markets around the world. Dow Jones reached its lowest point in a month, decreasing to 25,717 point. JCI also experienced a sudden crash in Tuesday (6/8), although both indices have bounced back per Friday (9/8).
However, as the stock market as a whole experienced a decrease in growth, the market for firms operating in extracting gold rejoiced as the increase in gold price brings higher profit margins, significantly affecting their stock prices most notably, Barrick Gold Corp. (the biggest gold mining company in the world) and Aneka Tambang (the state-owned mining company in Indonesia). The value of the stocks in Barrick Gold Corp. (GOLD) increased by 3%, whereas Aneka Tambang (ANTM), experienced an increase of a whopping 7%. Other notable gold companies that soared are Kinross Gold Corp. and Newmont Goldcorp Corp. On the case of PT. Aneka Tambang Tbk. (ANTM), its selling price of gold bars is at a record high of Rp. 746,000 per gram. As a result, gold are still clearly seen to be in high demand as a safe haven in the current market environment. As the solution to the trade war remains to be seen, the fluctuations of stock and gold markets must be watched attentively by investors in order to still gain considerable profit.
Sources:
Bloomberg
CNBC
CNN Indonesia
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