The price of gold edged lower after reaching a three-week peak on Monday. Investors have their attention focused on economic data expected from the U.S., and trade talks between the U.S. and its partners. Meanwhile, silver soared to a level that was last reached back in 2011.
Gold futures in the U.S. slid 0.1% to close at $3,359 while spot gold also eased by 0.1% to reach $3,350. Earlier, bullion had scaled to its highest level in three weeks.
One reason for the price of gold taking its foot off the pedal is the rally of the U.S. dollar, which climbed to an almost three-week high. When the dollar climbs, bullion tends to be adversely affected since international buyers who hold different currencies find it more costly to buy gold given that gold doesn’t yield any interest.
Bart Melek, a TD Securities analyst, also suggests that the price of gold has retreated slightly because players in the market are taking their profits from the recent climb exhibited by the metal. He adds that generally, the market is well-bid, which shouldn’t cause any concerns about a trend reversal in the price of bullion.
The market is also watching how key trading partners of the U.S., such as South Korea and the EU, make progress in trade talks with America. Trump raised the stakes on Saturday by stating that he would levy 30% tariffs on the majority of imports originating from Mexico and the EU starting in August. Similar notifications were sent to other U.S. trading partners.
Investors are also waiting for the CPI data coming out of the U.S. today, together with report on the Producer Price Index that is due on Wednesday. These will provide some clues regarding the policy direction of the Fed.
President Trump has been vocal about his desire to see interest rates further lowered, and if that came to pass, gold would benefit since demand for the precious metal rises when interest rates are low since bullion is non-yielding.
Silver has been having a good run buoyed by rising demand in the solar energy industry. Silver reached $38.38 an ounce, a price it hadn’t reached since 2011. Supply is low while demand is high, which creates bullish conditions that could drive the price further up. Meanwhile, other precious metals, like platinum and palladium registered losses, sliding 1.5% and 1.9%, respectively to sell at $1,378 and $1,192, respectively.
Stocks of gold stocks like Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are unlikely to be affected by this recent drop in the price of gold since the metal is still riding high.
NOTE TO INVESTORS: The latest news and updates relating to Aston Bay Holdings Ltd. (TSX.V: BAY) (OTCQB: ATBHF) are available in the company’s newsroom at https://ibn.fm/ATBHF
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