Safe-haven demand driving solid price gains for gold

NEW YORK (March 4) Gold and silver prices are higher in early U.S. trading Tuesday, with gold posting more solid gains after a strong rally on Monday. Safe-haven bidding continues early this week due to elevated geopolitical tensions and amid a sharp drop in the U.S. dollar index. April gold was last up $35.70 at $2,936.80. May silver prices were last up $0.23 at $32.54.

Risk aversion remains elevated early this week. U.S. trade tariffs against Mexico, Canada and China went into effect Tuesday, with the targeted countries already retaliating. That puts $1 trillion worth of global commerce within the realm of trade sanctions.

Broker SP Angel said today: “Speculation is rising that China will let the yuan depreciate to blunt the impact of tariffs and support exporters.” Presently, analysts expect China’s central bank to continue to hold the yuan steady, “but any further weakness against the U.S. dollar is expected to push Chinese buyers further into gold as a haven,” said SP Angel.

Asian and European stock markets were mixed to weaker overnight. U.S. stock indexes are pointed to lower openings when the New York day session begins.

The key outside markets today see the U.S. dollar index solidly lower again. Nymex crude oil futures prices are lower, hit a nearly three-month low, and trading around $67.50 a barrel. The yield on the benchmark 10-year U.S. Treasury note is presently at 4.157%. Said broker SP Angel today: “The 10-year yield has now fallen from 4.8% to 4.14% as traders brought forward rate-cut expectations amid economic growth slowdown concerns.”

U.S. economic data due for release Tuesday includes the weekly Johnson Redbook retail sales report, the RCM/TIPP economic optimism index. President Trump will also address a joint session of Congress today.

KitcoNews