Gold price rises to a new 6-year high

Gold hit a six-year high on Friday as investors plunged into safe haven amid the growing US-China trade war and the prospect of a return to ultra-empty monetary policy from the Fed.

December delivery gold, the most heavily traded futures contract in New York, peaked at $ 1,539.50 an ounce, up $ 31, or 2.1%, from yesterday's Comex target price. Gold is up 20% in 2019 and is trading at its highest level in six years.

On Friday, China announced plans to impose additional tariffs of $ 75 billion in compensation for new fees that President Donald Trump has planned after the US Christmas shopping season.

Trump responded that China "does not need" the United States and that he "ordered" American companies to "immediately start looking for alternatives" to Chinese supply chains.

The US economy faces “significant risks,” and trade policy uncertainty appears to play a role in the global slowdown and weak US production and capital spending, Fed Chairman Powell said Friday in Jackson Hole.

Gold is the only refuge

US stocks plummeted on the news, commodities including oil and copper plummeted, and government bond yields plummeted.

The ratio of US interest rates to gold prices is strongly negative. In an environment of rising interest rates, the opportunity cost of holding gold has risen because the metal does not yield returns and investors have to rely on the price increase to make a profit.

But expectations of lower rates make gold more attractive and also lower the dollar, which usually moves in the opposite direction from the price of gold.