Barely a day after United States President Donald Trump announced a potential five-percent import tariff on goods originating from Mexico, markets around the world responded with cynicism. The gold price and Bitcoin price rising.
While the proposed tariff will not go into effect before June 10, many lawmakers and analysts predict that the move will have major repercussions on the economy and may even lead to an economic recession.
In spite of the outrage, however, Trump remains adamant on his decision until Mexico finds a way to eradicate illegal immigration from its side of the border.
Stocks of automobile companies were among the worst affected, with General Motors and Fiat Chrysler declining by around four percent and Ford by approximately three percent immediately after the announcement. The S&P 500 and Dow Jones industrial average both dropped by over one percent.
In the interim, global traders are moving their funds into more stable assets, including precious metals and cryptocurrency. Both the gold price and Bitcoin price have picked up the momentum of late.
Gold Price Leads the Precious Metals Pack
This escalating trade tension between the United States and China has also fueled investor demand for stable commodities such as gold.
For the better part of this year, the gold price has declined consistently due to a strengthening dollar. However, Trump’s recent announcement has finally pushed the price of bullion to the green for the first time since January 2019.
While financial analysts believe that the silver price will follow in the footsteps of the gold price very soon, it has not shown any signs of upward movement yet. Platinum, however, dropped by over 10 percent this month — the biggest monthly drop in approximately three years.
Bitcoin Price Embarking on a Bull Run?
Gold and other precious metals are not the only commodities that have appreciated in value due to the recent trade war threat.
Until recently, the cryptocurrency industry was caught in the middle of an extended bear market that showed little sign of improvement since its initial downfall in early 2018. However, the cryptocurrency market recently has been on a steady rise.
Bitcoin (BTC), the largest cryptocurrency by market cap, soared from mid-$4,000 to $9,000 and is currently trading in the mid-$8,000 regions. In the past month alone, the Bitcoin price witnessed a gain of around 60 percent.
With the U.S. introducing even more tariffs on Chinese goods, cryptocurrencies such as Bitcoin have become increasingly appealing to international traders since the asset class is relatively unaffected by country-specific policies. Furthermore, given that the Chinese Yuan recently declined to its lowest in six months, many believe that cryptocurrencies can serve as a short term hedge or store of value.
Author: Rahul Nambiampurath
Read more at: https://beincrypto.com/bitcoin-gold-price-rise-mexico-tariffs/
