Gold Down As U.S.-China Trade War Shakes Equity Markets
(Kitco News)- The gold market is seeing renewed selling pressure Fridaymorning even as equity markets open sharply down.
The Dow Jones Industrial Average opened the session down morethan 100 points or 0.5% on the day, last trading at 25,013 points. At the same time,the S&P 500 Index opened the day down 11 points or 0.4%, last trading at2,771 points.
According to George Gero, managing director with RBC Wealth Management,gold is weak as he sees investors raising cash to cover their equity losses.However, despite the short-term weakness, he still sees long-term potential forthe yellow metal.
“Goingforward, we see inflationary signs and continued geopolitical problems asreasons to own gold,” he said.
While gold has struggled to find momentum -- unable to holdgains above its 200-day moving average, which comes in around $1,308 an ounce-- it remains range-bound, holding above critical support at $1,280 an ounce.
August gold futures last traded at $1,289.20 an ounce, downalmost 1.5% on the day. Prices are currently trading at their lowest level in three-weeks.
Eugen Weinberg, head of commodity research at Commerzbank, isalso optimistic on gold in the near term, especially as the Trumpadministration approved $50 billion innew tariffs on Chinese imports. It is expected that China will again retaliatewith its own tariffs on U.S. imports, with agriculture products in thecrosshairs.
“Everything right now is going against gold but I don’t thinkyou want to be short the metal in this environment,” he said. “I don’t see onemajor catalyst that will drive gold higher but there are a lot of littlefactors, and it won’t take much to shift the negative sentiment in the goldmarket.”
By Neils ChristensenFor Kitco News
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