After the US-China war of the past few months, the clash has further increased, causing quite a few fears. According to Chinese Foreign Minister Wang Yi, the two countries are one step away from the Cold War. By virtue of this great fear and uncertainty, gold prices have jumped upwards in recent days.
US-China war: Covid and Hong Kong security law
According to Beijing Foreign Minister Wang Yi, the two commercial powers are “one step away from a new Cold War”. Aided by the Covid and Hong Kong speeches.
Just talking about Covid, in these days Donald Trump said that China “could have stopped the Coronavirus, they did not know how to do it for incompetence or they did not want and both are unacceptable”. The United States has also asked to launch an investigation into the origin of the virus and its dynamics of spread. The Chinese minister, albeit very annoyed, responded to the thoughtful request made by the United States by agreeing, provided that the investigation “is without interference and is based on scientific objectivity”.
During a press conference on the sidelines of the proceedings of the parliamentary session, the Chinese foreign minister reserved very harsh words against Washington also regarding the Hong Kong speech. In recent days protests have been taking place in the city against the national security law being discussed at the Beijing People’s Congress. The law, according to protesters, deals a lethal blow to the autonomy of the former colony. The Chinese minister advised the United States led by Donald Trump not to interfere in the matter since “it is an internal issue of China and no one else”. The United States deems this clearly communist oppression unacceptable and promises repercussions.
Hacking attempts by China
As if that weren’t enough, the heavy accusations against Beijing by the United States regarding alleged hacking attempts by Chinese hackers have also animated the US-China war. According to Washington, Chinese hackers are trying to steal extremely sensitive information about the studies on treatments and the Covid vaccine that American scientists are carrying out. If the accusations turned out to be true, it would certainly not be the first cyber attack by the Chinese. In 2017, four officers of the Chinese People’s Liberation Army attacked Equifax stealing extremely sensitive data from 145 million U.S. citizens.
US airlines blocked by China
In addition to the pandemic and Hong Kong speech, air transport also increased the US-China conflict. The White House accused Beijing of curbing the attempt by US airlines to resume service to and from China, first of all Delta and United Airlines. The US Department of Transportation explained that China has not respected bilateral agreements by harming the commercial rights of the American airline companies. Beijing for its part replied that flight restrictions were implemented fairly for all airlines, without discrimination, for the sole purpose of preventing further contagion from Covid. At the moment, further attacks by one or the other party are not excluded.
US nuclear tests
There is also talk of a hypothetical nuclear test that the United States would be willing to carry out to intimidate China and Russia remotely, guilty according to the Trump administration also for having conducted nuclear tests in the recent past. Marshal Billingslea, Trump’s close associate, has repeatedly claimed that China is accumulating nuclear supplies to intimidate the US and its allies.
Daryl Kimball, a member of the Arms Control Association, considered this a dangerous and counterproductive idea. Nuclear tests by America – Kimball said – could also induce other States to retrace their path of arms, with all the dangerous consequences that would result.
Gold prices at all-time highs
Gold prices have reached all-time highs in recent days. As explained in Gold Price Hits All-Time High in EUR, concerns about a second wave of contagions from Covid-19 and tensions mentioned above have taken on a vital role.
The evolution of the US-China war in the coming days will be very important for the near future of gold. A further deterioration of the ratios could further increase the yellow metal price. In such uncertainty, there would be very few people who would go into the dark woods of equity investments – highly volatile and risky investments – and there would be very many who, even if very late, would aim for safe-haven assets.