Based on current futures contracts, the Australian share market looks set to follow the lead of U.S. markets and crash lower again on Tuesday.
On Wall Street the Dow Jones had its worst day of 2019, recording a decline of 2.9%. The S&P 500 index fell 3% and the Nasdaq index tumbled 3.5% lower.
The catalyst for this was China's decision to retaliate to President Trump's tariffs announcement by halting new purchases of U.S. agricultural products and allowing its currency to slide the most in a single day in over four years to below a key level of 7 yuan to the U.S. dollar.
But amongst the chaos, one asset class has performed particularly strongly – gold.
According to CNBC, the spot gold price rose 1.3% overnight to US$1,476.10 an ounce. This means the precious metal is trading at a six-year high, much to the delight of shareholders of Australia's leading gold miners.
The likes of Newcrest Mining Limited (ASX: NCM), Northern Star Resources Ltd (ASX: NST), Resolute Mining Limited (ASX: RSG), and St Barbara Ltd (ASX: SBM) are all likely to be on the charge on Tuesday as investors sell risk on assets and buy safe haven assets.
Can the gold price go higher?
With market volatility increasing, the trade war escalating, and bond yields falling, experts believe the gold price could easily break through the US$1,500 an ounce market in the very near future.
Michael Matousek, head trader at U.S. Global Investors, told CNBC: "What is driving gold is fear of these tariffs and the fear of China retaliating. Gold is in a bull market and is going to trend higher. This is just a start of another wave going up. I would not be surprised to see gold hit the $1,500 level by November-December and keep it sustained there."
This view was echoed by Benjamin Lu from Phillip Futures. He said: "All this volatility, growth fears, persistent weakness in economic data will be good enough for a risk-off environment."
All in all, it looks as though having a little bit of exposure to gold could prove to be a good thing for a portfolio over the remainder of the year.
