LONDON (Scrap Register): One of the potential outcomes of a trade war is that other nations start dumping U.S. Treasury securities, which could boost gold demand, said Goldman Sachs.
Analysts put out a detailed research report outlining how U.S. President Donald Trump’s proposed tariffs on aluminum and steel could impact those metals as well as the industries that rely on them, both producers and consumers.
Yet another impact could be capital flows, particularly from U.S. trade partners that are net savers, Goldman added.
Because these trade partners are large holders of U.S. Treasuries, it is often cited that they may retaliate by dumping U.S. securities at time when the U.S. Treasury needs to access global capital markets.
“If materialized, a reduction in U.S. Treasury holdings may boost the demand for gold, supporting our bullish view on gold prices,” Goldman added.