As of February 8, 2019, gold seems to be holding steady. There are worries that a lengthened Sino-US trade war could make the global economic slowdown even worse. However, a strong US dollar has bullion on track for its first weekly loss in three.
For spot pricing, gold remained steady at US $1,309/ oz as of 0700 GMT. This price comes after the metal hit it’s lowest at US $1,302.11 this past Thursday since Jan 29.
Down by 0.1% at US $1,312.70, gold futures are beginning to struggle.
The Trade War and its Effect on Gold Prices
President Trump on February 7 claimed he had no plans to meet with Xi Jinping, the President of China. At least not before their March 1 deadline to come up with a trade deal. Both the US and China are in a 90-day hiatus in their trade war to work on a deal.
Around the world, stocks pulled back suddenly for fear of a slowdown of global growth. The downturn has the potential to reach Europe thanks to the uncertainties on the trade tensions between China and the US.
Economist John Sharma, who is with the National Australian Bank says some of their growth indicators are showing an easing global activity while trade volumes are hit. This data makes people cautious which could derive support for gold about US $1,300- US $1,330.
February 7 saw the European Commission cut its forecasts sharply for eurozone economic growth both for this year and next. This change is thanks to expectations that the bloc’s largest countries could be held back by tensions in global trade as well as domestic challenges.
Sharma continued saying people are still unsure as to what direction the trade war might go. He also said that the strength of the US dollar is capping the gains of gold.
Hovering close to its two-week high was the dollar index, a gauge of its value versus six significant peers.
Prices for bullion have increased by nearly 13% since making it over one and a half year lows in August. This change is mostly thanks to a volatile stock market, a dovish US Federal Reserve, and a pull-back in the dollar.
However, a strong dollar makes bullion more expensive for those who hold other currencies. It has also driven gold down a solid 0.6% this week alone.