Weekly Market Reports

Gold Prices Rise Amid Trade Tension Woes

Daily Gold & Silver Market Report – 5/29/2019

  • Volatile trade tensions between U.S. and China boost Gold.
  • Gap between interest rates and spot Gold gets wider.
  • Cybersecurity pioneer talks differences between Gold and Bitcoin.

The price of Gold rose Wednesday due to growing investor worries of a worldwide economic downturn, ,with the ongoing U.S.-China trade war perpetuating these fears. This battle between two of the world’s largest economies also sent U.S. Treasury yields down, according to a Reuters report on Spot Gold was up 0.3 percent at 5:17 a.m. (ET), while Gold futures in the U.S. were up 0.4 percent. Equity markets around the globe fell alongside U.S. Treasury yields, to their lowest levels since September 2017, as a growing number of investors grew pessimistic about economic growth. Diminishing bond yields reduce the opportunity cost of holding Gold, which bears no interest.

A release published in China’s Communist Party newspaper Wednesday cautioned that Beijing was prepared to strike back in the seemingly fruitless trade negotiations. President Donald Trump said earlier in the week that advisers in Washington D.C. are not ready to make a deal. In other Precious Metals, Platinum slumped to a three-month low.

Gap Between Spot Gold and Interest Rates Widens

The constant trade war between the U.S. and China has put downward pressure on long-term interest rates while increasing the appeal of Precious Metals like Gold. Spot Gold slipped about half a percent Tuesday, only to rebound during early trading Wednesday. This could be seen as a signal that demand for safe-haven assets is once again increasing. Junior Analyst Rich Dvorak writes on DailyFX, “A sizable disconnect between spot Gold and long-term interest rates emerged since mid-April and the gap between XAUUSD and US10YR appears to have only widened.”

However, Gold’s future is not yet guaranteed. Dvorak observes the gap has widened, “yet Gold bulls have shied away from the commodity as of late, likely in response to a damaged technical picture judging by the short-term bearish downtrend formed from the series of lower highs after prices peaked near $1,340 earlier this year.”

Crypto Analyst Differentiates Bitcoin from Gold

Many analysts point toward the similarities between Gold and Bitcoin, citing similarity that both commodities set the standard in their investment areas. As a naturally occurring element, Gold supplies are finite. The creators of Bitcoin say it is limited as well, although since cryptocurrency is based on computer code, this could technically change.

Today’s Gazette recently talked about how antivirus expert John McAfee differentiates between Bitcoin and Gold. McAfee recently tweeted, “The difference between Gold and Bitcoin? Gold is a commodity, occupying space, with mass, temperature, shape. Bitcoin is an idea, made manifest through a series of numbers, with no true location or substance - a clever concept with infinite fluidity. To compare them is madness.”

At 9:45 a.m. (ET), the APMEX Gold and Silver spot prices were:

  • Gold, $1,284.60 Up $4.20
  • Silver, $14.50 Up $0.08
  • Platinum, $797.30 Down $2.80
  • Palladium, $1,351.50 Up $3.00

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APMEX Market Reports provide our readers with a review of spot price activity and some of the factors that may be affecting the market for Precious Metals. While the information is obtained from sources we believe to be reliable, we do not guarantee its accuracy or its completeness and we encourage you to conduct your own investigation prior to making any decision based on the information. The Market Reports are not intended as a comprehensive discussion and there may be other factors affecting the financial marketplace. These Market Reports are provided for informational purposes only and do not constitute a recommendation by APMEX to hold, purchase or sell any Precious Metal product. All orders, purchases and sales, if any, are subject to the terms of the User Agreement and other applicable policies.

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