Gold Holds Onto $1,190 Mark | August 21, 2018
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Gold Holds Onto $1,190 Mark

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Gold Holds Onto $1,190 Mark

Spot gold is off of its overnight highs but is still trading at $1,190/oz, right where it closed Monday.

The silver price was also about unchanged at $14.75/oz this morning.

The precious metals were helped by a dip for the dollar, but the gold price is still down 9% year-to-date.

Platinum and palladium both hardly budged from $795/oz and $910/oz, respectively.

Trump, Fed Square Off

The big story driving U.S. markets Tuesday was the surprising butting of heads between President Trump and the Federal Reserve.

Trump criticized the Fed's steady interest-rate hikes, suggesting that rates are going up right at a time when it will inhibit greater expansion for the American economy. This is not the first time he has expressed reservations about the central bank's influence over economic outcomes.

Most key Fed members are attending the annual meeting at Jackson Hole, Wyoming hosted by the Kansas City Fed.

The president also questioned Fed Chair Jerome Powell—just as he did with Powell's predecessor, Janet Yellen. Some analysts are characterizing Trump's comments as "meddling" with the central bank's supposed independence from politics.

Following the high-profile criticisms, the U.S. dollar lost ground, sliding 0.3% to 95.6. This lifted most of the USD's major peer currencies, pushing the euro up above $1.15 for the first time in two weeks.

Most currency pairs on the foreign exchange markets advanced against the dollar, in fact. The yen added 0.3% and the pound sterling gained 0.4% despite ongoing Brexit worries.

After moving higher yesterday, Treasury bonds fell Tuesday. The 10-year T-note yield added three basis points to 2.85%.

Stocks Rise Amid Easing Trade Tensions

Every day it seems the narrative surrounding the global trade war swings violently from one direction to the other: Monday's fears of a growing impasse give way to Tuesday's optimism of striking a new deal.

Although both the U.S. and China seem to be willing to hammer out such an agreement, the trade conflict presses forward. President Trump said he didn't expect much movement in negotiations this week, even as Washington plans to roll out more tariffs against Chinese imports.

Nonetheless, stock markets moved higher across this board this morning. The S&P 500 is close to a new all-time high and the Dow Jones could pull out of correction territory (10% below its previous all-time high) for the first time since February.

Shares rose 1.8% overnight in Shanghai, but Japan's Topix index closed 0.4% in the red.

Equities were about 0.8% higher in Europe yet traded flat on London's FTSE 100.

Back in the U.S., projected GDP growth for the third quarter continues to look strong.

The precious metals lack any clear impetus to move higher barring a dramatic escalation of the disputes over tariffs and international trade. Gold does have strong support at the $1,150/oz level: Below this point, miners would be forced to cut production, which would in turn help raise prices.

Oil prices surged in early trading. Although the softer dollar undoubtedly played a role, sanctions against Iran's oil production are being cited as the main culprit.

Brent crude was up 1.0% to nearly $73 per barrel while WTI crude jumped 2.2% (+$1.50) to $67.90/bbl.

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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