Gold Price Extends Post-Payrolls Recovery on Trade Fears

December 10, 2019

New York (Dec 10)  Gold prices rose again on Tuesday as fears spread that the U.S. and China won’t sign an interim trade deal before the next round of U.S. import tariffs kicks in on Sunday.

Commerce Secretary Wilbur Ross, who already said last week that it would be better to postpone a trade deal with China until after next year’s election, told Fox Business News that it was more important to get a good deal than to get a quick one.

Markets have taken the near-complete silence from Beijing and Washington in the last 48 hours as a sign that there is no progress being made. However, whether the U.S. will levy the new tariffs, covering an annual $150 billion worth of goods annually, is still unclear, given that President Donald Trump has used his discretion to stay and grant exemptions on previous tariff increases.

By 9:20 AM ET (1320 GMT), gold futures for delivery on the Comex exchange were up 0.5% at $1,471.55 a troy ounce, having recouped over half of what they lost in the wake of Friday’s upbeat labor market report. Spot gold was up 0.4% at $1,467.09 an ounce.

Silver futures were also 0.4% higher at $16.70 an ounce while platinum futures were up 1.0% at $907.25.

Elsewhere in the metals complex, palladium futures closed in on a new all-time high after extensive power cuts in South Africa threatened supplies from the country’s mines. Palladium futures were up 0.2% at $1,860.10.

Global economic data did little to suggest that the trend toward easier monetary policy worldwide would be broken any time soon, even though no action is expected at either the Federal Reserve’s or the European Central Bank’s policy meeting this week.

Machine tool orders in Japan fell at their fastest rate in year-on-year terms since 2009, while China’s producer price inflation stayed negative at a rate of 1.4% on the year through November. The Japanese data, combined with a 5.5% annual drop in German factory orders in October, speak to a continued weakness in business investment worldwide, given the high share of export orders in both series.

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