My opinion is that phase 1 or complete trade deal will have a brief hike in business confidence but in reality this is nothing other than the reversion of the pre-trade war condition which is the coming of the end of boomtime(extended by Trump tax subsidy of $1.5T). Yes GP will be impacted but only briefly as there are other factors that had and will drive GP higher. Some of the known factors driving GP are:
1) Central banks are buying gold.
2) Recent US FED reducing interest rate: holding cost becomes almost zero and therefore becoming potentially good "capital growth" asset. US FED is likely to reduce interest rate back to zero as leading economic indicators are flashing red on pending economic slowdown.
3) Economic slowdown: US economic expansion can't expand forever: GP will pick up as investors will want to park their money in asset that has no counter-party risk. Many potential black swan events.
4) US$ will be cheapen due to QEs. Gold will then become a hedge against cheaper US$.
5) Higher US inflation again due to QEs. Same reason as above. But due to demographic change, inflation is not going to be as severe as in the 1970s.
6) Geopolitical tensions: Gold is the natural candidate as safe asset.
7) Supply & demand. Beside central banks buying up gold, there are a huge pool of new gold buyers in the form of the increasingly bigger middle class of Chinese and Indian. Gold is limited and unless GP heads up higher, the less viable gold will not be mined to meet the demand.
8) Non-US trading pack of China, Russia, Iran, etc... moving away from the reliance US$. If such a pack comes about, there will be new form of default currency and at this point the only trusted currency is gold.
9) Long term event and remote chance of new currency system: But if there is a whiff of this in the work, GP will sky rocket. Fiat currency will eventually die. I can't see digital currency totally replacing fiat currency (but maybe partial). There has been no other viable replacement system and therefore it is likely that the fallback may just be gold! It may be temporary and not perfect but it will become permanent for a bit of time! As you had said, gold is limited but it can still be used as currency if the price is right.
How I wish and hope that If GP jumps to $5,000 tomorrow, GCY will be worth quick a few dollars and will be snatched up the next day!!!
IMO
(20min delay)