Gold Off 14-Month High

Gold Off 14-Month High

Gold prices slipped from a 14-month high after an agreement between the U.S. and Mexico appeared to avert a trade war, reducing demand for the yellow metal as investors became less risk averse.

Comex gold and silver futures dipped on the headlines. August Gold futures sitting at $1,333.3, off $12.4 at the time of this report and August Silver is at $14.770, down 0.295.

However, several bullish factors still support gold, keeping it near its highest level since April 2018, despite a stronger Dollar Index. In fact, after dropping about $10 when the market opened yesterday, spot gold has plateaued around $1230. The supporting factors include growing tensions between the U.S. and China and speculation that the U.S. Federal Reserve will cut interest rates. The CME FedWatch Tool is citing an 82% chance that the Fed will ease the interest rates in their July meeting.

China boosted its gold purchases for the sixth consecutive month in May, taking its total to 1,916 tons, the Financial Times reported. The People’s Bank of China bought 15.6 tons of the metal last month, it said, citing the central bank. That brings purchases to 74 tons since the end of November, when the country began ramping up, the FT said, citing Refinitiv data. The value of the reserves has risen to $79.8 billion.

The worsening trade dispute between the U.S. and China dominated a meeting of Group of 20 finance ministers and central bank governors over the weekend in Japan. In the final communique, policymakers said they “will continue to address risks and stand ready to take further action” amid “intensifying” tensions on global trade and geopolitics.

Overall Chinese imports dropped by 8.5% in May from a year earlier, according customs data released Monday. It was the sharpest decrease since July 2016 and much steeper than the 3.8% forecast by analysts, Reuters reported. Exports rose 1.1%, bucking expectations of a decline, but shipments to the U.S. fell for a second month.

Meanwhile, South Africa has lost its status as the continent’s biggest gold producer to Ghana because output is shrinking amid high costs, regular strikes and the challenges of extraction from the world’s deepest mines, according to Bloomberg. And Barrick Gold Corp. and Newmont Goldcorp Corp. are trying to lure back general investors who abandoned the gold sector years ago.


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