Prices for the precious metal have jumped once again, hitting a fresh record not seen since 2013 as growing recession fears help spur prices onward. Gold reached a new high, ending the day at $1,524.60 per ounce.
While some positive U.S. economic data has added some downward pressure on precious metals and other safe havens, the markets are overall still bearish.
As news regarding the re-occurrence of the inverted yield curves continues to worry investors. Wednesday, in particular, saw the price rise to $1,527.80, a new six-year high for gold, before losing a couple of dollars on Thursday.
“Many theories describe the causal mechanism between yield inversion and recession, but the key point is a lack of confidence in the current interest rate environment—specifically that yields will not be able to sustain their current rates over the long term,” Ryan Giannotto, director of research at GraniteShares according to MarketWatch. “This rationale has profound implications for gold. Not only are interest rates expected to fall, but more importantly, a yield inversion signals substantial uncertainty about future expectations,” he added.
However, just a little while later, the U.S. released its retail sales report for July, which showed a gain of 0.7 percent and over double what expectations were. This helped push prices for gold downwards just a little, but still ending the day in the $1,520’s.
While definitely a good piece of news that might have prompted some gold owners to sell and cash in immediately, the long-term outlook for the precious metals remains incredibly strong, with many experts suggesting that a rise to the $2,000’s is strong not just from a speculative perspective but also from a fundamental perspective as well.
Friday’s prices are expected to go up as well, with global markets reacting in fear on the recently released news that China plans to retaliate against the U.S. for the new round of tariffs, but also possibly in response to President Trump’s comments regarding how China is handling its Hong Kong situation.
Trump tweeted Wednesday evening that China’s “humane” response was a prerequisite for any trade deal being reached, a statement which appears to have set back trade negotiations somewhat as this new announcement from China seems to be a reaction to this as well.
Overall, the current markets haven’t been more jittery as worries seem to have hit their peak so far in 2019. Other potential news that could swing prices for gold and other equities include the slew of other economic data that’s coming out soon, including the weekly jobless claims report, the Philadelphia Fed business outlook survey, industrial production, the NAHB housing index, manufacturing and trade inventories, and so on.
As for international gold demand, some of the world’s largest buyers outside of the U.S. have cut back on purchases. According to the latest data, gold imports to India, the second-biggest consumer of the precious metal, fell by 42 percent to just $1.71 billion in July. Jewelers also have reported higher supplies of scrap gold as consumer sells their old jewelry in response to these higher gold prices.
