Weekly Market Reports

Gold Moves Up Amid New Tariff Threats

Daily Gold & Silver Market Report – 5/31/2019

  • New tariffs against Mexico boost appetite for Gold.
  • Many predict an interest rate cut from the Fed.
  • Analysts disagree over whether the Palladium bubble has burst.

The price of Gold reached a two-week peak early Friday, aiming for a monthly gain. If Gold can hold onto its traction, it would be the first monthly gain in four. This new appetite for risk-averse assets comes as U.S. President Donald Trump again threatens widespread tariffs, this time against Mexico. Several outlets have reported that the proposed tariffs would directly affect consumers, increasing prices for everyday items such as TVs, avocados and tequila. A report on CNBC states Washington will impose a 5 percent tariff on all Mexican goods starting June 10, unless the flow of illegal immigrants across the southern U.S. border stops.

This unexpected announcement shook investors, many who were already concerned about the possibility of a recession. Weak economic data was also released this week, leading some to project the U.S. Federal Reserve may cut interest rates to give markets a boost. Reduced interest rates could push additional support toward Gold bullion, as they would minimize the opportunity cost of holding Precious Metals.

Analysts Split on Palladium Bubble Viewpoints

The trade war between the U.S. and China, along with unpredictable demand for auto-catalysts, has led to predictions of volatility for Palladium prices over the next year. In a Mining Weekly report, analyst Jason Welz believes this irregularity will have a twofold impact, affecting both demand for Palladium as a safe-haven investment, as well as trade sentiment. Over the past few months, the price of Palladium nearly doubled from $826.40 per ounce in September 2018 to a high of $1,600.50 per ounce in March. Prices rapidly fell to $1,354 per ounce a little more than a week later. This sharp decline led many to conclude the Palladium bubble had burst.

On the other hand, commodities consultant Lara Smith counters that this was more of a price correction than a bubble bursting. Smith points out Palladium “hasn’t given back all of its gains” and is now contracting around 23.6 percent from its three-year gains. Recent reports indicate demand for fuel-cell automobiles is growing, with Palladium serving as a critical component in catalytic converters. Currently, there is a deficit in the world supply of Palladium, which could help the Platinum Group Metal find more stability.

At 10:35 a.m. (ET), the APMEX Gold and Silver spot prices were:

  • Gold, $1,303.40 Up $12.80
  • Silver, $14.68 Up $0.08
  • Platinum, $797.60 Up $0.50
  • Palladium, $1,353.20 Down $23.50

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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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