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Gold Down As U.S.-China Trade War Shakes Equity Markets

Kitco News

(Kitco News) - The gold market is seeing renewed selling pressure Friday morning even as equity markets open sharply down.

The Dow Jones Industrial Average opened the session down more than 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 at 2,771 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 for the yellow metal.

“Going forward, we see inflationary signs and continued geopolitical problems as reasons to own gold,” he said.

While gold has struggled to find momentum -- unable to hold gains 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, down almost 1.5% on the day. Prices are currently trading at their lowest level in three-weeks.

Eugen Weinberg, head of commodity research at Commerzbank, is also optimistic on gold in the near term, especially as the Trump administration approved $50 billion in new tariffs on Chinese imports. It is expected that China will again retaliate with its own tariffs on U.S. imports, with agriculture products in the crosshairs.

“Everything right now is going against gold but I don’t think you want to be short the metal in this environment,” he said. “I don’t see one major catalyst that will drive gold higher but there are a lot of little factors, and it won’t take much to shift the negative sentiment in the gold market.”

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