Investors Preferring U.S. Dollar Over Gold Amid Trade Wars

June 3, 2019

Washington (June 3)  As U.S. President Donald Trump turns his attention to Mexico from China in the latest tariff-for-tariff battles, investors are clamoring for more cash in the form of U.S. dollars rather than traditional safe-havens like gold.

Other geopolitical risks outside the U.S. in addition to the trade spats, however, should keep gold prices in check, according to some analysts.

“The on-going trade war between the US and China, in addition to political developments across Europe should see the metal remain firm,” said Swiss refining and finance group MKS Pamp.

“[But] at the moment,” says a column at the Financial Times, “the [US Dollar] — and not bullion — is seen as the best place to warehouse cash as the trade war between the US and China escalates.”

Gold-backed ETF plays can be had with the SPDR Gold Shares (NYSEArca: GLD) and SPDR Gold MiniShares (NYSEArca: GLDM), while short-term traders can also play the gold market through miners with the VanEck Vectors Gold Miners (NYSEArca: GDX), Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG) and the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT).

What could spur a gold rally is a trigger event like a rate cut by the central bank.


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