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Precious Metals Gain on Trade War, Soft US Inflation; Copper Declines

May 30, 2019 at 20:48 by Vladimir Vyun

The trade war between the United States and China continues and shows no sign of ending anytime soon as China accused the USA of “naked economic terrorism”. Gold and other precious metals took the opportunity to profit from their role as a safe haven, gaining on Thursday. Unsurprisingly, copper reacted in the opposite way, logging a decline.

Bullion also gained on speculations that the Federal Reserve may cut interest rates. While the preliminary (second) estimate of US gross domestic product released today demonstrated solid economic growth in the first quarter of this year, the inflation print was not that good. The report showed that the core PCE price index rose 1.0% in the first quarter. That is compared to the increase of 1.8% in the fourth quarter of 2018 and the 1.3% increase in the advance (first) estimate. Considering that PCE inflation is the key indicator watched by the Fed, it is not unreasonable to expect that the soft data will make the US central bank reverse monetary tightening. US President Donald Trump provides additional push for monetary easing, criticizing the policy of high interest rates and calling for lowering them.

Futures for delivery of gold in August advanced 0.54% to $1,293.3 per troy ounce as of 20:43 GMT on COMEX today. July silver gained 0.62% to $14.5 per ounce. Spot price for platinum was up 0.29% to $796.07 per ounce, while palladium climbed 1.51% to $1,368.5 per ounce. At the same time, copper for delivery in July declined 0.6% to $2.648 per pound.

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