Gold is almost unchanged in the Thursday session, following four consecutive days of losses. In North American trade, the spot price for one ounce of gold is $1268.14, down 0.01% on the day. On the release front, major U.S indicators were a mixed bag. The Philly Fed Manufacturing Index slid to 19.9 points, its lowest level since August. There was better news on the employment front, as unemployment claims remained unchanged at 218 thousand, beating the estimate of 220 thousand. On Friday, OPEC members meet in Vienna.
It’s been a rough ride for gold prices, which are down 2.7% since Friday. This is somewhat surprising since the escalating trade war between the U.S and China has unnerved investors and sent global equity markets sharply lower. Gold often benefits from geopolitical crises, as investors tend to snap up safe-haven assets such as the base metal. However, this latest round of trade battle rhetoric has boosted the U.S. dollar, which continues to gain ground against a basket of currencies. In essence, investors and traders have been betting on the greenback rather than on gold. Earlier on Thursday, gold dropped to $1261, as it recorded a new low for 2018.
Central bankers converged in Sintra, Portugal this week, and the trade war between the U.S and its trading partners was high on the agenda. The heads of the central banks from the U.S, Japan and the European Union were united in the gloomy view of the trade conflict, with Federal Reserve Chair Jerome Powell saying that the changes is trade policy could force the Fed to “question its outlook”. ECB President Mario Draghi said that the trade spat could have negative consequences on monetary policy. If these protectionist measures force central banks to alter their monetary policy, this could have a significant impact on gold prices, which are sensitive to moves in interest rates.
