Gold prices extended gains Thursday, taking bullion prices to within touching distance of a 2019 high, as investors bet on central bank easing and weakening currencies as the global economy continues to feel the affects of a prolonged U.S.-China trade war.
With markets pricing in a 50% chance of a September rate cut from the European Central Bank, a view that could be confirmed at its policy meeting later today in Vilnius, and CME Group futures pointing to at least two easing moves from the Federal Reserve before the end of the year, investors have been snapping up gold and gold futures in the wake of sagging currencies and declining bond yields.
"Gold has stormed back into fashion throughout the week following the acceleration in Dollar weakness, said FXTM analyst Lukman Otunuga. "Vulnerability in the dollar has played an influential role in Gold's rapid sprint up the hill, with prices punching above levels not seen in over three months to above $1340. Market speculation over the Federal Reserve cutting interest rates amid trade tensions, a weaker dollar and geopolitical risks should ensure gold remains in demand moving forward."
Spot gold prices were quoted at $1336.77 each Thursday, the highest since February 19, and have risen 5.2% since President Donald Trump unveiled increased tariffs on China-made imports on May 5. The SPDR Gold Shares ETF, the world's largest, has risen 3.76% in net asset value over the past three months to 125.99 per unit.
#Gold continues to attract upside momentum while #copper is teetering on the brink. Chart source: @saxobank pic.twitter.com/EzqVE1LKET
- Ole S Hansen (@Ole_S_Hansen)June 4, 2019Curiously, China has been perhaps the world's biggest buyer of gold this year, with the People's Bank of China adding to its bullion reserves for five consecutive months, taking the total to 61.1 million ounces, according to official monthly figures.
Copper prices, meanwhile, a closely-watched benchmark for future economic growth, slumped to a fresh two-yer low on the Shanghai Futures Exchange of just of $6,630 per ounce.