AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

1/15/2020: Gold rises with trade pact signing

Source: Bill Musgrave, American Gold Exchange

Austin — Gold rose 0.6% to close at $1,554 as soft US economic data and lingering worries about trade with China undercut the dollar and boosted demand for safe-haven assets.

China and the US signed the long-awaited "Phase One" deal today, de-escalating the 18-month trade war that slowed both economies. Among other provisions, the pact stipulates that China will purchase another $200 billion in US factory, farm, and energy products and services over two years. In return, the US will reduce by half its 15% tariff on $120 billion in Chinese goods.

While the agreement has been hailed as a step in the right direction, investors remain worried that it does not address some of the fundamental sources of conflict between the two nations. Modest protections for US intellectual property are included, but little headway has been made structural reforms to level the playing field for US companies operating in China, or to eliminate the piracy of sensitive US technology—two main causes of the trade war.

Also worrying investors, high tariffs will remain in place on both sides. While China will lift 15% duties on autos imposed in December, it leaves untouched tariffs on nearly half of other US exports. And the US will continue to levy 25% tariffs on $260 billion in Chinese imports along with the 7.5% remaining on another $120 billion.

Separately, the Fed Beige Book showed the US economy expanding "modestly" during the final six weeks of 2019, as tariffs and trade uncertainty continued to pressure some Fed districts.

US Treasury bonds rallied alongside gold on flights to safety, pushing down yields. The dollar eased 0.2% against major rivals as haven currencies like the yen and Swiss franc gained strength. A falling dollar typically supports gold and other commodities by making them less expensive in other currencies.

The other precious metals were also higher, with silver gaining 1.4% while platinum and palladium jumped 3.9% and 2%, respectively.

At the Comex close: February gold rose $9.40 to $1,554; March silver added 25 cents, to17.99; April platinum climbed $38.30 to $1,025.60; and March palladium jumped $41.80 to $2,165.10 an ounce.