After operating in the background to start the week, investor anxiety over trade returned to prominence Wednesday.
The precious metals followed most other commodities lower. Spot gold sank again, falling by 0.3% to trade at $1,251/oz.
Spot silver lost 12¢ (-0.7%) to about $15.90/oz.
Similarly, platinum slipped $8 (-0.95%) to break below $840/oz. Palladium was down 0.4% to around $930/oz.
Trade War Fears Heightened
Somewhat unexpectedly, gold has shown little reaction to the escalating trade war.
Safe havens haven't had quite the appeal over the past few months that one would anticipate. It's noteworthy that we are currently in the weakest seasonal period of gold demand during the summer months.
This may begin to change now that the White House has announced tariffs on an additional $200 billion of Chinese goods. Beijing responded with threats of retaliation. The back-and-forth dynamic over trade has repeated itself for weeks.
The persistence of the trade war rhetoric has dragged commodity prices lower, especially copper. The industrial metal was down another 3% Wednesday to just $2.75 per pound.
Trade tensions also provided a boost to the dollar. The USD was steady on the DXY index, holding just below 94.1.
In forex trading, the euro inched higher to $1.175 but the British pound moved slightly lower.
The firmer U.S. dollar has undoubtedly weighed upon gold prices, reinforcing the inverse relationship between gold and the greenback.
Stocks Fall Despite PPI
In addition to ongoing trade brinksmanship between the U.S. and China, the issue is also plaguing Europe.
Britain's political future remains in question as the uncertainties of Brexit hang in the balance. On top of the faltering negotiations with the EU, the U.K. is welcoming President Trump for his first official diplomatic visit to the country.
Earlier this week, Trump criticized NATO while in Germany.
Crude oil prices, another target of President Trump's criticism, didn't escape the downturn for commodities. WTI crude slumped 1% to $73.35/bbl while Brent crude tumbled 2% to $77.25/bbl.
The Department of Labor reported that the producer price index (PPI) rose at its fastest pace in almost seven years during June.
PPI is considered a gauge of wholesale price inflation. The index was up 0.3% month-on-month and has accelerated by 3.4% over the past year.
This did little to move the bond market. The 10-year Treasury yield was unchanged at 2.85%.
Wall St opened in negative territory. The trade war may overshadow quarterly earnings if no progress is made to ease the current tensions.
Equities overseas were hit even harder. Shares were down more than 1% in Asia as well as Europe: Shanghai fell by 1.7%, Tokyo's Nikkei 225 lost 1.2%, and most of the eurozone indices were off 1.3%.
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