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Gold has snatched the crown out of the gutter, reclaiming its birthright as the safe-haven king. Tariff qualms are still the talk of the town and precious metals began to capture that fear in earnest yesterday. Gold added $55 to its tally on Thursday, cruising past its previous record high to reach $2,989 an ounce. Early trading in the Asian session edged that figure ever so slightly higher still to $2,990. Trade fears are certainly one of the factors behind the rise in bullion prices, but there are a couple of other narratives currently being floated. The first is the accumulation of precious metals by central banks around the world, as China, the US and many others shore up their reserves. The second is the simmering question of just how disconnected the paper contracts are from their physical counterparts. The huge outflows from the London vaults seen in recent months rattled some investors, to the point where some are beginning to question whether there are deeper structural woes under the surface.
Too early to celebrate just yet, but the Greenback finally appeared to find some strength over the past couple of days. Last week was a miserable experience for USD bulls, but Wednesday and Thursday saw back-to-back gains for the Dollar, albeit modest ones. The Asian open has maintained the momentum, pushing the DXY back up to 104.
The latest round of US inflation data revealed lower than expected figures across the board; a surprise which temporarily lifted US indices on Wednesday. Celebrations were sadly cut short, as the following session saw all three majors resume their descent into the void. The S&P 500 joined the Nasdaq Composite in correction territory yesterday, as both are now down over 10% from recent highs. The Dow is not far off. The lower inflation print has provoked murmurings that the Fed could be moved to cut rates on the Dollar, something which has long been on President Trump’s wish list.
The week is almost over, with the Michigan Consumer Sentiment the only major event left on the economic calendar. That said, politics and unexpected announcements could disrupt the peace at any time.
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