Gold is has posted slight losses in the Monday session. In North American trade, the spot price for one ounce of gold is $1266.80 down 0.26% on the day. It’s a quiet start to the week, with only one event. New Home Sales New Home Sales jumped to 689 thousand, well above the estimate of 665 thousand. On Tuesday, the U.K publishes CBI Realized Sales and the U.S will release CB Consumer Confidence.
The escalating trade war between the U.S and China has spooked investors and sent global equity markets sharply lower. Although gold, a safe-haven asset, usually benefits from geopolitical crises, that has not proven the case this time around. Instead, 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. On Thursday, gold dropped to $1261, as it recorded a new low for 2018.
With little in the way of fundamental releases early in the week, the markets are keeping a wary eye on the escalating trade dispute between the U.S. and its major trading partners. The heads of central banks have expressed alarm, and last week, Jerome Powell and Mario Draghi sounded gloomy about the repercussions that a trade war could have on economic growth and monetary policy. On Sunday, the Bank of International Settlements (BIS), which acts as an umbrella group for some 60 central banks also weighed in. The head of the BIS, Augustin Carstens, warned that recent protectionist moves could hamper global growth and financial stability, and could have negative side effects on the currency markets. At the same time, the BIS expressed support for the Federal Reserve raising interest rates gradually and for the ECB heading towards normalization as it winds up its massive asset program.
