On Thursday, China moved forward with a resolution to introduce national security laws in Hong Kong to quell protests that befall there.
The proposal came after the US House of Representatives passed a bill on Wednesday, ruling out sanctions to Chinese officials involved in the suppression of Uighurs. It stemmed from the decision of the US that Hong Kong is no longer autonomous from China, making President Donald Trump take actions, such as the cancellation of special trade agreements, which is of great importance to many large US companies doing business in Hong Kong.
However, despite all those dissents, the Chinese government still proceeded to ratify the so-called national security law, which supposedly tightens control over Hong Kong. The move further angered the United States, and the relations between the two countries continue to deteriorate.
The increased hostility between Beijing and Washington over China's human rights policies, including its relations with Hong Kong and the treatment of the Muslim minority, reinforces the demand of safe haven assets.
"The souring US-China relations have returned to the forefront of the market," wrote Jim Wyckoff, senior analyst at Kitco.com.
Gold was also affected by the negative economic performance of the US dollar.
US GDP has dropped by 5%, durable goods orders by 17%, and applications for unemployment benefits continued to grow, with an increase of 2.1 million.
Although the number of applications for unemployment benefits are high, the latest record was the lowest figure observed since the onset of the coronavirus. Indeed, the dollar fell, but gold could not raise its quotes at a fair level, because US yields continue to rise. In addition, risky assets are also rallying, hindering the rise of gold prices.
Investors also pointed to further discussions of the US monetary policy, including negative interest rates and an increase in the demand for gold-oriented stock exchange markets. They believe that these will be the catalyst for gold's growth, despite the rising global stocks.
The gold market in New York turned upside down in just a couple of months, and the struggle for metal turned into a glut.
