CME precious metals stocks soar on Trump tariff threat
Gold stocks in COMEX-approved warehouses have jumped by one-third in the past six weeks.
The gold price fell below the psychologically important $1,300 an ounce level on Wednesday after strong economic data outweighed safe haven buying on geopolitical concerns.
On the Comex division of the New York Mercantile Exchange, gold futures for August delivery in early morning trade exchanged hands for $1,294.60 an ounce, down $5.60 from Tuesday’s trading session.
US gross domestic product grew at a 4% annual pace in the second quarter, according to government data released Wednesday. First quarter number were also adjusted, showing a smaller contraction.
The much better than expected numbers – led by robust consumer spending and a pickup in construction and business investment – boosted the dollar which usually move in the opposite direction of the gold price.
The data also strengthens the case for an accelerated winding down of the US Federal Reserve’s economic stimulus program and a sooner than anticipated rise in US interest rates.
Higher rates increases the opportunity costs of holding gold because the metal is not income producing.
Clouding the picture further was a 2% annualized rise in US inflation at its strongest rate in three years, which could also prompt a hike in rates.
Though off its highs for the year gold is still up some 9% in 2014.
The key US employment report on Friday will give further direction for US monetary policy and the gold price.
Comments
Rodney Blakestad
Holly cow…is this news… new, or is it to be expected…. The banks in the USA and other western economies have been able to borrow funds from their respective central banks for less than 1% for several years, and lend the same trillions of dollars at 8% to 18%, or more, for the same time period….Like a mining operation, it takes several, to 8 years, to define the scope of work needed to spend the funds in a fashion acceptable to the bank or the industry…. So, now in the shadow of interest rate increases, the economy is beginning to reflect the results. I cannot say I am surprised.
Before long, the other 98% of the people in the world will question the sanity of this process…. I wonder where the prices of gold/silver/copper/ tungsten/platinum/zinc/etc. prices will be in in a few months…
All I can say is buy gold/silver metal commodities on the dips….the prices will rise to levels of historic wonder.
If you would like to participle in gold’s run-up, contact Rodney Blakestad.
Good luck to all.