Gold steadies near six-year peak, silver jumps as growth risks persist

29 Aug, 2019

Gold steadied near a six-year peak on Thursday and silver rose to its highest in more than two years as fears of a global recession, exacerbated by the protracted US-China trade war, drove interest for safe havens.

Spot gold was steady at $1,538.36 per ounce, at 0956 GMT. Prices scaled $1,554.56 an ounce on Monday, their highest since April 2013.

US gold futures were down 0.1% at $1,547.10.

"Markets are waiting for the next step in terms of trade talks between US and China. Until then, uncertainties continue to be fairly supportive for safe-haven assets, particularly precious metals," ING analyst Warren Patterson said.

Silver rose 1.1% to $18.53 per ounce, after hitting its highest since April 2017 at $18.64 earlier in the session.

"If you look at the gold-silver ratio, silver is still relatively cheap. It looks like it still has some more room to move higher," Patterson said.

On Wednesday, Washington made official its extra 5% tariff on $300 billion in Chinese imports, and set collection dates of Sept. 1 and Dec. 15.

But gold's advance was limited by comments from China's Commerce Ministry, which said on Thursday both sides "should create conditions" for progress in negotiations and that China was against escalating the trade war.

"We still feel the momentum remains to the topside (for gold) in the longer term, given global central bank easing, a likely prolonged period of trade unrest and a host of geopolitical headwinds," MKS PAMP said in a note, citing Brexit, Iran tensions and Argentina's financial challenges.

Adding to uncertainty surrounding Britain's exit from the European Union, Prime Minister Boris Johnson suspended parliament for more than a month before the Brexit deadline of Oct. 31.

Amid increasing signs of a global slowdown, the US Federal Reserve and the European Central bank are widely expected to cut rates next month, while many investors believe the Bank of Japan could follow suit.

Also, yields on 30-year US Treasuries and 10-year German bunds hit record lows on Wednesday, while the US Treasury yield curve remains inverted, commonly considered a sign of an impending recession.

These factors have added to the appeal for gold, considered a safe investment in times of political and financial uncertainty.

Reflecting investor interest in gold, holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, have increased by 6.6% this month.

In other metals, platinum jumped 2.7% to $924.40, its highest since May 2018, and palladium gained 1.2% to $1,486.97 per ounce.

Copyright Reuters, 2019

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