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Gold Stays Steady Trading Amid Trade and Economic Uncertainty

Gold was steady headed into the end of the week. Investors have been waiting to see if new U.S. tariffs on Chinese goods would emerge by a Dec. 15 deadline and after the Federal Reserve’s decision to leave interest rates unchanged. 

Spot gold was at $1,472 an ounce and U.S. gold futures rose 0.3% to $1,479.10.

“The slight fall in gold can be attributed to profit-taking after the Fed decided to keep rates on hold, but the change is minimal as investors are still cautious about what will happen on Dec. 15,” said Mitsubishi analyst Jonathan Butler.

The U.S. Fed’s benchmark overnight rate in its range between 1.50% and 1.75% three-quarters of a percentage point below where it started the year. 

“With the Fed possibly expanding the balance sheet again in 2020 … gold should be a regular feature in one’s asset allocation during periods of market uncertainty, especially when interest rates are low,” AxiTrader market strategist Stephen Innes noted.

U.S. President Donald Trump met with top advisers on Thursday to discuss trade and the Dec. 15 deadline for new tariffs on nearly $160 billion worth of Chinese consumer goods, three sources familiar with the plans.

According to Mitsubishi’s Butler, investors should look at gold as a longer term hold. Markets focused on the U.K. election which could lead to Britain’s departure from the European Union, and Christine Lagarde’s first meeting of the European Central Bank later in the day. 

Gold has long been considered a potential safe-haven investment during political and financial uncertainty. 

Palladium had increased 1% to $1,928.04 and has hit a record high of $1,931.50. The metal soared passed $1,900 for the first time in its history. Flooding in South Africa mines pushed the metal higher, as they triggered severe power blackouts and thus hindering production. 

“Even after the mines open in South Africa, palladium prices are not expected to correct much. It rather has a high potential to hit $2,000 soon,” Butler added.

Platinum increased 0.3% to $941.89 while silver was little changed $16.88.

Gold had surged to a five-week high before selling off due to a tweet from President Trump. Gold futures were down $1.10 an ounce at $1,473.90 and March Comex silver prices were up $0.01 at $16.94 an ounce. 

Downbeat U.S. economic data is also bolstering gold’s outlook with jobless claims increasing more than forecast. 

Gold bulls cheered when the new European Central Bank President Christine Lagarde appeared dovish on ECB money policy, saying that it would continue its bond-buying program as long as it takes. 

President Trump then tweeted that the U.S. and China wanted a trade deal –– a positive sign that a partial trade deal could soon be completed.

The FOMC meeting of the Federal Reserve meant no change in U.S. interest rates and a positive upbeat of the U.S. economy. 

The FOMC said there were no rate-cut plans planned for 2020, with most comments coming out of the meeting viewed as neutral.

Gold and Treasury markets rallied, nonetheless, as the U.S. dollar index sold off and hit a five-week low in the aftermath of the FOMC statement Wednesday afternoon. 

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