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Gold, Silver Prices Settle At Session Highs As Equities Drop More Than 2% On Trade War Fears

Kitco News

(Kitco News) - Growing fears of an intensifying trade war and weak economic data continue to pressure risk assets, pushing gold and silver prices higher.

Looking ahead, in an email statement to Kitco News, Lukman Otunuga, research analyst at FXTM, said that he sees a potential for gold to continue to trend higher in the near-term, with $1,340 an ounce, representing a critical barrier for the yellow metal.

“With the global trade tension likely to stimulate risk aversion and pressure the dollar, gold has scope to appreciate further ahead of the NFP report scheduled to be released on Friday,” he said.

Comex June gold futures settled Monday’s session near session highs at $1,346.90 an ounce, up nearly 1.5% on the day. Meanwhile, the U.S. dollar is struggling to hold gains above the key psychological level at 90 points.

Silver is also seeing substantial gains, outperforming gold. May silver futures last traded at $16.672 an ounce, up more than 2% on the day.

Gold saw a strong big through the entire session, attracting capital after China imposed additional tariffs on 128 U.S. products.

Early in the North American session, gold and silver saw new buying momentum after the Institute for Supply Management (ISM) said its manufacturing index showed a reading of reading 59.3% for March, down from February's reading of 60.8%. Consensus forecasts were calling for a reading around 60.1%.

Not only are gold and silver benefiting from a struggling U.S. dollar but are attracting investor interest as equity markets see another across-the-board 2% selloff.

In a recent interview with Kitco News, Jasper Lawler said that he remains bullish on gold as he expects equity markets to struggle in an environment of rising volatility.

“When we see more sustained weakness in equities that will be gold’s time to shine,” he said.

George Gero, managing director with RBC Wealth Management, said that he also expects geopolitical uncertainty to continue to support gold prices. He added that investors are also starting to be wary of bond markets, which will pressure the U.S. dollar.

“Attention is back on gold as investors are shunning bonds and equities,” he said.

However, not every segment of the gold market is a pillar of strength. Physical demand for bullion remains depressed. Sales data from the U.S. Mint shows that American Eagle gold coin sales fell to their lowest for the month in March, and silver coins dropped to their lowest in 11 years.

The data shows that the mint sold 3,500 ounces of gold in various denominations of American Eagle coins in March, a decline of 36.3% from 5,500 ounces sold in February. For the year, gold bullion demand is down 83.3% from March 2017, when 21,000 ounces were sold.

At the same time, U.S. Mint sold 915,000 one-ounce American Eagle silver coins in March, down 2.9% from 942,500 coins sold in February. For the year, silver coin sales dropped 43.3% compared to March 2017, when 1.6 million ounces were sold.

Maxwell Gold, director of investment strategy at ETF Securities, said in a recent interview with Kitco News, that while he is bullish on gold in the long run, the market needs to see renewed momentum from the physical market if prices are going to break critical resistance at $1,400 an ounce eventually.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.