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Gold Spikes As Safe-Haven Appeal Attracts Investors

August 2, 2019 at 18:01 by Andrew Moran

Gold futures are soaring to close out the trading week, driven by renewed trade tensions between the world’s two largest economies and monetary easing by the Federal Reserve and other central banks. The yellow metal’s safe-haven appeal is what is attracting investors to precious metals at the start of the new month. Without a US-China trade agreement in sight, traders may pour more into gold.

December gold futures soared $25.00, or 1.85%, to $1,456.80 per ounce at 17:37 GMT on Friday on the Comex division of the New York Mercantile Exchange. The last time gold traded this high was at the end of 2013. Gold prices will finish the week up 2.8%, living year-to-date gains to 13.5%. Over the last 12 months, the precious metal has surged 20%.

Silver, the sister commodity to gold, is also edging up to end the trading week. September silver futures rose $0.10, or 0.62%, to $16.28 an ounce. But the white metal will record a weekly loss of 0.8%, though it did post a July gain of more than 8%.

President Donald Trump rocked markets on Thursday afternoon when he announced on Twitter that he would be imposing a new 10% tariff on the remaining $300 billion in Chinese goods. He accused Beijing of not buying US agriculture and not stopping the flow of fentanyl into the country. China responded by saying it would retaliate with “necessary countermeasures,” adding that “all the consequences would be borne by the United States.”

A somewhat mixed jobs report did not do much to quash geopolitical fears.

In July, the US economy added a smaller-than-expected 164,000 jobs, keeping the unemployment rate at a near 50-year low. The education, professional and business services, government, healthcare, and manufacturing sectors led the way. But retail, mining, and information services continued their downward employment trends. The labor report was considered mixed because while job creation was lower than anticipated, more people entered the workforce.

Metals benefited from a weaker US dollar as the greenback tumbled 0.28% to 98.10. The buck will squeak out a tiny weekly gain of 0.1%. A falling currency is typically good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

With the Fed and other central banks revving up accommodative policy again, investors fear that this is a concession that the global economy is cooling down. Gold tends to benefit from a sliding interest rate environment because it sends investors away from yield-bearing assets and into bullion.

In other metal markets, September copper futures slumped $0.095, or 3.59%, to $2.56 per pound. September platinum futures shed $1.30, or 0.15%, to $850.00 an ounce. September palladium futures plunged $12.40, or 0.88%, to $1,401.90 per ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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