Gold price drops as trade concerns ease, while silver price rallies
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Gold prices dipped after a three-day rally on Wednesday, as a US-Japan trade deal allayed trade war concerns and dampened demand for safe haven assets.By midday, spot gold fell 0.6% to $3,410.26 per ounce, having hit a five-week high the previous session. US gold futures also declined 0.6%, trading at $3,420.90 per ounce in New York.Click on chart for Live PricesThe pullback follows a series a trade deals announced by the Trump administration in recent days, most notably a better-than-expected deal struck with Japan on Tuesday evening.“Trade deals like the one between the US and Japan mitigate macroeconomic concerns and may dampen safe haven demand. This could lead to a continuation of the recent push and pull in (gold) prices,” Nikos Tzabouras, senior market analyst at Tradu.com, told Reuters.However, the longer-term prospects for gold remain favourable, he added, citing mounting concerns over US debt that may exacerbate de-dollarization trends, leading to higher gold holdings by central banks.So far this year, gold has climbed about 30% amid uncertainty surrounding US President Donald Trump’s attempts to reshape global trade, prompting investors and central banks to accumulate bullion.In late April, the precious metal hit an all-time high of $3,500, before consolidating within a tight range during the ensuring months.Silver continues to soarHowever, gold’s performance is trumped by that of silver, which has soared nearly 36% year to date. Unlike gold, silver is mostly used as an industrial input. As a result, higher projected demand from sectors such as solar could propel silver prices higher even in absence of the safe-haven draw.Evidently, spot silver rose by as much as 0.4% to $39.54 an ounce Wednesday — the highest since 2011.“The recent rally in silver is being driven by a combination of strong industrial demand, persistent supply deficits, and increased investor interest,” said Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany.“A decisive push past $40 could come from a further breakout in gold prices, renewed weakness in the US dollar, or signs of deeper supply tightness – especially if physical premiums start to rise again in key Asian markets.”In recent days, there has been evidence of market tightness in the London market, after nearly half a million ounces flooded into US warehouses on tariff fears, according to Bloomberg.Exchange data shows that the cost of borrowing silver metal has jumped above historical norms, while growing exchange-traded fund holdings further erode the amount of metal freely available to buy.(With files from Bloomberg and Reuters)Weiter zum vollständigen Artikel bei Mining.com
Quelle: Mining.com
