Gold Gains for the Sixth Consecutive Week Amid Trade War Concerns
Last week, gold reached a fresh all-time high above $2,800 as tariff concerns spurred safe-haven buying. This week’s calendar of economic events was filled with speaking engagements from various Federal Reserve officials, along with key U.S. employment data set for release on Thursday and Friday.
On Monday, stocks staged a late rally when news surfaced that the U.S. would delay tariffs against Mexico for one month. Still, major averages ended the day lower, with the Nasdaq Composite shedding the most, at 1.2%. Meanwhile, gold gained 0.8% on its way to a new all-time high of $2,818 as investor uncertainty surrounding tariffs supported higher precious metals prices.
Wall Street investors shrugged off tariff and trade war concerns during Tuesday’s trading, as tech shares jumped, leading all three major averages to daily gains. Elsewhere, gold and silver saw significant daily upticks following news of China’s retaliatory tariffs on select U.S. imports. Additionally, the Chinese government threatened sanctions on several U.S. companies, namely Google.
Fears of a broader trade war between the world’s two largest economies fueled the continued run to safe-havens, pushing gold to a new record high of $2,857 on Tuesday. Silver made a similar move on the same day, jumping by nearly 3% to a closing price of $32.28.
Equities rallied for the second consecutive session on Wednesday, following news that U.S. businesses created a surprising 183,000 jobs in January when economists had forecasted a number closer to 150,000. Most notably, Nvidia shares surged by more than 5%, which supported a 300-point or 0.7% gain for the Dow. Gold extended its gains on Wednesday, as trade war worries buoyed bullion prices. By the end of Wednesday’s trading, gold was 0.6% higher at $2,567, while silver saw little change, ending the day at $32.37.
Stocks were mixed on Thursday, following a slightly hotter jobless claims print which revealed that 219,000 Americans applied for unemployment benefits during the last week of January. Despite the employment news, large-cap tech stocks such as Nvidia, Microsoft, and Google advanced.
The tech stock rally led to 0.4% and 0.5% respective gains for the S&P 500 and Nasdaq, as the two averages came within 1% of record highs. While stocks were mixed, gold fell by 1% on Thursday as the yellow metal reached overbought territory and investors looked ahead to this morning’s non-farm payroll report.
This morning, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose by 1430,000 in January when 170,000 was expected. However, the unemployment rate declined to 4.0% from 4.1%. The unemployment data further dented the odds of a March rate cut to less than 20%. Despite this, gold jumped this morning, securing a 2% weekly gain at $2,862. At the same time, silver retreated from the key psychological level of $32, but still managed a 2% weekly uptick at $31.87.
Stocks endured a sell-off this morning as investor worry surrounding tariffs and inflation dented investor sentiment on Wall Street. Despite today’s downturn, major averages ended the week higher. Weekly gains were led by the Nasdaq at 1.61%, while the Dow and S&P 500 notched 0.08% and 0.94% respective weekly upticks.