Gold Finished Flat, Rate Hike and Trade Tensions Concern

Gold Finished Flat, Rate Hike and Trade Tensions Concern

Gold Finished Flat, Rate Hike and Trade Tensions Concern


Gold prices held steady during Asian trade Tuesday as investors remained on the sidelines amid expectations of a Fed interest rate hike later this month and on fears of an escalation in the US-China trade dispute.

Spot gold was mostly unchanged at 1,195.79 oz at 0654 GMT.

US gold futures rose 0.1% to 1,201.60.

Strong US payrolls data last week cemented expectations that the Fed will raise interest rates in September, in what would be its 3rd hike this year, with expectations of one rise more in December.

Higher rates increase bond yields, making the non-yielding gold less attractive and tend to boost the USD.

The precious Yellow metal has shown weakness as the US economy has demonstrated strong performance in Q-2 of Y 2018.

Precious metals traders are bracing for a potential escalation in the US-China trade dispute  after President Donald Trump raised the stakes Friday by saying he was ready to impose tariffs on virtually all Chinese imports to the United States.

The strong stance by President Trump has made investors buy the USD in the belief that the United States has less to lose from a trade dispute than China making USD-priced gold more expensive for non-US buyers.

The imposition of increased tariffs between the United States and China will likely damage global economic conditions in the longer term. However, safe-haven demand remains weak for the short term as traders focus on stronger USD prospects.

Gold prices dropped more than 12% from a peak in April with the precious Yellow metal losing its safe-haven status to the USD, driving investors to raise their Bearish bets on COMEX gold and liquidate gold ETFs.

The USD supported by expectations of higher US interest rates may translate to more pain for gold, spot prices could drop to 1,185-1,160 marks short to medium-term.

Physical gold buying waned slightly in Asia this week as investors waited to see if prices would fall further.

The precious Yellow metal is seeing strong resistance at 1,200, with investors selling into any rallies that threaten to push it above that mark.

Among other Precious metals

Spot silver rose 0.3% to 14.19 oz, Platinum climbed 1% to 790.20 oz, and Palladium gained 0.6% to 981.10 oz.

Stay tuned…

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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