Gold Bulls Perplexed Safe-Haven Metal Can't Catch Bid On Global Equities Sell Off
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(Kitco News) - Gold prices are slightly down in mid-morning U.S. trading Monday. The bulls are scratching their heads and wondering why their metal has not reacted more positively to unsettling developments on the geopolitical front. World stock markets tanked overnight on news President Trump on Sunday tweeted a threat to further increase U.S. trade tariffs on Chinese goods. The sense of the marketplace had been that a U.S.-China trade deal was close and could be finalized late this week. China stock markets fell from 5% to 7% overnight, making those losses the largest one-day declines in three years. The U.S. Dow Jones Industrial Average was down 345 points as of this writing, which is up from its daily low.
Adding to geopolitical concerns to start the trading week, the U.S. is sending a naval task force, including an aircraft carrier, to the Middle East as a show of force against Iran. A U.S. official said the U.S. warships are "fully prepared" to respond to any attack from Iran or others.
One possible reason gold prices may not be moving up today is the strength of the U.S. dollar, which is trading not far below last week's two-year high. However, in past episodes of heightened geopolitical uncertainty, both the greenback and gold have appreciated on the same day. Remember that markets are fickle and tend to do anything and everything possible to frustrate the largest number of traders. Today is one of those days for gold market bulls.
June gold was last down $2.00 an ounce at $1,279.30.