Gold prices have resumed a downward slide, as the base metal has recorded losses in four of the past five sessions. In Wednesday’s North American trade, the spot price for an ounce of gold is $1322.33, down 0.61% on the day. In the US, it was a quiet day, with no major releases. Thursday promises to be busier, as the US releases durable goods orders and unemployment claims.
The greenback rally has sent its rivals to lower ground, with gold also heading lower. Gold has fallen 2.1% since April 16, and earlier on Wednesday dropped to $1318 an ounce, its lowest level since March 19. Much of the dollar rally can be attributed to rising yields on US bonds, which have hit 4-year highs this week. On Wednesday, 10-year US Treasury notes climbed to 3.015%, and 2-year bonds have increased to 2.504 percent. With inflation appearing to be on the rise, there are stronger expectations that the Federal Reserve will raise rates four times in 2018, which is good news for the US dollar. With oil pushing above $70 a barrel, there are concerns that inflation will rise, which has pushed bond prices lower and yields upwards. Gold has also lost ground due to a recent reduction in geopolitical risk, with an easing of tensions between North and South Korea, and a lull in the conflict in Syria.
The trade battle between China and the US has become a geopolitical hotspot, dominating the headlines and shaken global markets. After a series of tit-for-tat tariffs between the economic giants, there has been widespread concern that these moves could lead to a trade war which would slow down Chinese growth and trigger a global recession. However, US Treasury Secretary Steven Mnuchin sought to lower the rhetoric on the weekend, saying that he was considering a trip to China, adding he was “cautiously optimistic” that the two sides could resolve the trade dispute. If relations between the US and China improve, gold prices could continue to head lower.
