Commodity Blog

Gold futures are settling lower to kick off the trading week as upbeat US manufacturing data sparked investor optimism. However, gold’s losses were capped as financial markets fear that US trade relations with Brazil and Argentina have soured following President Donald Trump’s tariffs on aluminum and steel imports. Then, of course, there are still concerns about a US-China trade agreement.

February gold futures tumbled $3.40, or 0.23%, to $1,469.30 per ounce at 19:28 GMT on Monday on the Comex division of the New York Mercantile Exchange. Gold prices are looking to spark a rally in December after they fell nearly 3% last month. The bright side for gold investors is that the precious metal remains up 14% year-to-date.

Silver, the sister commodity to gold, is also trading lower in the return from the Thanksgiving holiday weekend. March silver futures slipped $0.12, or 0.7%, to $16.985 an ounce. The white metal is attempting to stay above $17 to finish 2019, but the momentum is not on its side following last month’s 6% loss.

On Monday, the Caixin Markit manufacturing purchasing managers’ index (PMI) came in at 51.8 in November, up from 51.7 in October – anything above 50 indicates expansion. The market had penciled in a reading of 52.2. However, the Institute for Supply Management (ISM) reported that its manufacturing index slipped from 48.3% in October to 48.1% in November. Analysts had anticipated a reading of 49.2%.

In other data, construction spending fell 0.8% in October to a seasonally adjusted $1.29 trillion.

Global financial markets were caught off guard when President Trump tweeted that he would restore tariffs on aluminum and steel from Brazil and Argentina. He defended the move by citing their currencies’ devaluation: the Brazilian real has been the worst-performing emerging market currency and the Argentine peso has plunged in recent months.

The president also took a swipe at the Federal Reserve, encouraging the central bank to lower interest rates and introduce more accommodative monetary policy mechanisms. This year, the Fed cut interest rates three times and investors are anticipating the Eccles Building to keep rates where they are until the middle of next year. Markets might garner additional information during next week’s final Federal Open Market Committee (FOMC) meeting of 2019.

Regarding US-China trade developments, it was reported that the White House will keep its December 15 deadline for introducing new tariffs on the remaining $156 billion in Chinese goods. For now, the only way to prevent these import levies is if phase one of a trade deal is signed. But Chinese analysts say that the first phase will only move forward if Washington agrees to rollback in tariffs, which the White House has said it will not do.

In other metal markets, January copper futures were flat at $2.63 per pound. January platinum futures edged up $0.60, or 0.07%, to $901.00 per ounce. January palladium futures surged $16.90, or 0.93%, to $1,827.00 an ounce.

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