Gold ticked up this morning on continued concerns over the civil unrest in Hong Kong and worries about global economic growth.
Gold futures had slipped yesterday and equities soared when the U.S. delayed some tariffs on Chinese goods until December. The stock markets promptly rallied, but at the opening bell this morning, the Dow was down $370, Nasdaq down $132 and the S&P was down $41.
This morning the yellow metal recovered its position solidly above $1,500 an ounce. Investors continued to seek a safe haven to protect against the U.S.-China trade standoff, economic uncertainty, the unrest in Hong Kong and the devaluation of the Argentine peso. Currently, the Comex December contract is at $1,524.30, up $10.20.
The Standard & Poor’s 500 Index shot up 2% on Tuesday, and Treasuries tumbled. U.S. President Donald Trump indicated that the grace period on the Chinese tariffs was to avoid affecting the holiday shopping season.
In Hong Kong, the airport canceled flights for a second day Tuesday as protesters clashed with police, though they mostly resumed Wednesday morning. And in Argentina, the peso tumbled on increasing concern that the South American nation will default on its debt.
Gold may be heading for $2,000 an ounce amid negative yields and a series of central bank actions, Daniel Ghali, commodities strategist at TD Securities, told CNBC.
Expectations are growing that the Fed will follow its July 31 rate cut with a second one in September. The CME FedWatch Tool still has the odds of a Sept. 18 rate cut at 100%. Currently, probability of a 25-basis-point reduction has risen to 78.8% from 68.5% a week earlier, putting the likelihood of a 50-basis-point cut at 21.2%.
In economic news, China’s industrial output grew 4.8% in July, the slowest pace in 17 years and less than the 5.8% analysts had forecast. Retail sales were also weaker than expected, increasing 7.6% last month compared with a year earlier, less than the 8.6% growth forecast. Tuesday, a Labor Department report showed U.S. consumer prices rose more quickly than expected in July with the CPI gaining 0.3% compared with expectations for a 0.2% increase. U.S. jobless claims, industrial production and retail sales are set to come out Thursday.
Silver futures slid more than gold Tuesday on Comex. September futures decreased 0.5% to settle at $16.99 an ounce, however this morning Silver has reclaimed its turf. Currently the September contracts are at $17.19, up $0.205. Spot platinum slipped 0.4%, and spot palladium increased 1.7%. All three were little changed early Wednesday.
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