Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold dipped 0.1% to close under $1,269 despite a downturn in the dollar as escalating trade-war tensions drove investors into government bonds.

President Trump has suggested another $400 billion in tariffs against China and the US Treasury is reportedly planning limits for Chinese investment in US tech firms. In addition, the President is threatening to impose a 20% duty on European autos while demanding that US trading partners remove barriers or face further punishment.

The Dow tumbled 1.3% and Nasdaq more than 2% on growing concerns that a full-scale trade war may ignite a global recession. Treasury yields sank to a three-week low as investors shed risk and piled into government bonds.

The New York Times reports that the yield curve is flattening out, and that's not good news for US economy. Ordinarily, long-term Treasurys yield quite a bit more than short-term, to compensate investors for the risk of higher prices that result from solid economic growth. Today, the difference between short-term and long-term yields is the smallest since 2007, just before the Great Recession. In other words, the bond market does not foresee much growth in the economy long-term.

An inversion of the yield curve, which happens when short-term debt yields more than long-term, has "correctly signaled all nine recessions since 1955," according to research from the New York Fed.

The dollar slipped 0.2% against major rivals, as foreign exchange traders shifted in to safe-haven currencies like the Japanese yen and Swiss franc.

Gold often trades in sympathy with haven currencies but failed to gain traction today. Trade tensions weighed heavily on demand for industrial metals in China, pulling gold and silver lower in their wake. And a generally hawkish US interest rate outlook, with the Fed projecting two more hikes this year, has kindled bullish sentiment on the dollar, propelling it nearly 3% higher this year. A rising dollar pressures gold by making it more expensive in other currencies.

The other precious metals also fell, with silver losing 0.8% while platinum and palladium dropped 0.5% and 1.2%, respectively.

At the Come close: August gold dipped $1.80 to $1,268.90; September silver lost 5 cents to $16.41; October platinum slipped $2.30 to $871; and September platinum fell $11 to $935.40 an ounce.