Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold jumped 0.9% to close above $1,285 as soft US data and escalating tension between the US and China weighed on risk appetite, driving investors into safe havens.

US equities retreated further, with the Dow and S&P 500 dropping 1.2% each on expectations that the world's two largest economies are girding for a protracted trade war. Tech shares were hit especially hard, knocking the Nasdaq 1.6% lower.

Adding to risk-off sentiment, IHS Markit's manufacturing index fell to a nine-year low in April. Perhaps more worrisome, its survey of the services sector fell to the lowest level in more than three years. Including banking and retailing, services companies employ around 80% of all US workers.

New home sales slid 7% in April, although the trend remains firmly upward. Year to date, sales are 6.7% higher than one year ago.

The dollar fell 0.2% against major rivals on speculation that the slowing US economy and accelerating trade war will induce the Fed to cut interest rates this year. Based on Fed funds futures trading, CME FedWatch now forecasts a 79% likelihood that rates will drop by December, up from 67% yesterday and 54% one month ago. Lower rates typically weaken the dollar, boosting gold in turn by making it less expensive overseas.

Gold gains came despite sharply lower oil prices, which fell more than 5% on concerns that US-China trade wars will further slow growth and energy demand. Gold often trades in sympathy with oil as an inflation hedge.

The other precious metals were mixed, with silver rising 1.1% while platinum and palladium, more directly tied to industry, lost 0.7% and 0.4%, respectively.

At the Comex close: June gold gained $11.20 to $1,285.40; July silver rose 16 cents to $14.61; July platinum slipped $5.80 to $799.50; and June palladium fell $5.70 to $1,307.80 an ounce.