Mexico’s proposed higher mining royalties could block nearly $7bn in investments
The Mexican government proposed raising mining royalties under the argument that metal prices have risen in recent years.
Gold prices continued to rise on Thursday as geopolitical tensions between the US and China intensified, boosting global demand for the safe haven metal.
Spot gold climbed 1.5% to $1,790.65 per ounce by 12:30 p.m. ET, its highest in four weeks. US gold futures fared even better, up 1.7% to $1,807.00 per ounce.
[Click here for an interactive chart of gold prices]
The latest rally comes as the fallout from US House Speaker Nancy Pelosi’s visit to Taiwan keeps markets on edge. While anxiety eased somewhat after the trip ended, China has since started military drills in areas surrounding the island.
Bullion rose even after Federal Reserve officials pledged the central bank would continue an aggressive fight to cool soaring inflation. The Bloomberg Dollar Spot Index was little changed after slipping earlier on Thursday.
“Gold is pushing higher again this morning as yields ease off this week’s highs and the dollar softens,” Craig Erlam, a senior analyst at Oanda Corp., said in a Bloomberg note.
Recession fears may also support bullion as they could “trigger safe-haven flows,” he said, suggesting a push toward $1,800 is possible.
Investor sentiment toward bullion may be turning after a selloff in July, according to Rhona O’Connell, an analyst at StoneX. Still, recent price moves “aren’t much more than a correction from the recent falls,” she said.
“The technical parameters are all much more positive than hitherto and this will be helping,” O’Connell said in an interview. “ETFs are seeing some light buying, which may also influence sentiment.”
(With files from Bloomberg)
