AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.
5/9/2019: Gold rises on trade war jitters
Source: Bill Musgrave, American Gold Exchange
Austin — Gold rose 0.3% to close above $1,285 as escalating trade-war tensions between the US and China pressured stocks and the dollar, boosting appetite for safe-haven investments.
With trade negotiations breaking down, President Trump has declared his intention to raise tariffs on $200 billion Chinese imports to 25% from the current 10% as of tomorrow. Additional tariffs of 25% on another $300 billion in goods have also been threatened.
The Dow fell 0.4% and the Global Dow 1% on worries that the new levies will undermine growth and corporate profits. Moody's projects the increase to 25% in current tariffs will shave nearly 1% off US growth by Q4 of 2020. If tariffs are extended to all China imports and Beijing retaliates, real GDP would fall 2.6% and 3 million jobs would be lost by 2020, according to Moody's.
The dollar slid 0.3% against major rivals as foreign exchange traders shifted into safe-haven currencies like the yen. A falling dollar supports gold by making them less expensive overseas.
Yields on 10-year Treasurys continued to fall, causing the yield-curve to invert for the first time since March, as investors flocked into the safety of government bonds. An inverted yield curve, which occurs when the three-month yield climbs above the 10-year, often presages recession.
The other precious metals were lower, with silver sliding 0.6% while platinum and palladium lost 1.5% and 1.8%, respectively.
At the Comex close: June gained $3.80 to $1,285.20; July silver dropped 9 cents to $14.77; July platinum lost $13 to $851.40; and June palladium shed $23.40 to $1,283 an ounce.
AGE Gold Commentary
Gold is climbing again, reacting to falling bond yields as the cost of money has become cheaper ... read more