The Gold Industry has been quiet from a fundamental perspective, with most analysts and market participants trying to fill the gap, with the significant relationship of the US dollar and the precious metal.
At this point of time, a new development is kicking in, and creates new interest and reactions as to how the Gold game is globally played, in general.
More directly, Latin American country Venezuela, which is currently seen as economically nonproductive, could be pulling the strings, and making moves that interfere and change Gold’s trade.
Venezuela, currently under control of leftist President Nicolas Maduro, is an Oil exporter as part of the OPEC umbrella but at the same time, has the 2nd highest gold reserves in the world.
Since President Nicolas Maduro has been elected, he has been talking about taking action towards creating wealth for his country, from exploration of energy and minerals or metals.
On the other hand, Venezuela is going through a fifth consecutive year of recession that has led to shortages of food and medicine.
Since the country is confirmed to be facing inner economic difficulties, the only way to create wealth is from outer investments, or selling goods to other countries.
For example Turkey, in 2018 has become the largest importer of non-monetary gold from Venezuela.
More precisely, the trade between the two countries has increased significantly, with data confirming that Turkey imported $900 million worth of the precious metals from Venezuela until September 2018.
Furthermore and according to Venezuela’s President Nicolas Maduro new deals have been signed with Russia, for Investments to take place in the country’s oil and gold sectors and were confirmed though Reuters during the previous days.
However, Venezuela’s activities have not come unnoticed from the US, who accuses the Latin American country’s activities as corrupt, violating human rights and triggering an economic meltdown.
Moreover, last month U.S. President Donald Trump took action banning anyone in the United States in business with entities and people involved in “corrupt or deceptive” gold sales from the South American country.
Here we would like to make the important note that, any commodities involved in any form of banning, restriction or limit tends to increase in price.
Especially speaking of the most precious of metals, which is widely considered as a store of significant value.
Maduro frequently criticized the U.S. for its trade wars being the reason for his country’s economic troubles.
Gold prices have been very sensitive to the trade wars dispute, as its relation to risk is evident whenever a development or improvement on the matter, comes into play.
At the same time, countries building huge amounts of Gold, is not a fact to be overlooked.
Russia and Turkey have increased their holdings in the shiny metal which creates some sort of future investment and potential gain in later years or decades.
The US as the most dominant country on the planet, may not be happy with precious metals being traded uncontrollably and for this reason Washington has imposed sanctions on Venezuela, regarding Gold.
As a conclusion, it is said that Venezuela has been swarmed by illegal miners and that the country is in action to fight these activities in order to use its treasures towards improving the economic conditions its citizens live in.
Venezuela’s gold trade is minor compared to the OPEC member’s oil sector, but is for sure a very promising source of the yellow metal, and could be considered a sizable fraction of the future of the industry.
Gold is in a bullish momentum since the G2O summit came to an end, with the Trump Xi meeting confirming a cease tariffs 90 day period.
If the precious metal remains in the upswing it could breach the 1241.18 (R1) resistance level, reaching higher for the 1250.79 (R2) resistance barrier.
A breach over the (R2) level could mean the next stop may be the (R3) 1259.78 resistance hurdle.
On the contrary, a bearish momentum could send the precious metal to the 1232.93 (S1) support barrier, and even lower, aiming for the 1225.91 (S2) support barrier.
Below our (S2) level we may see the shiny metal heading to the (S3) 1218.64 support barrier.