Gold continued its correction, suffering from the renewed optimism on the commercial front and on the stock markets: the price of the ounce of yellow metal yielded Friday 0.25% to $1,462.80 for the December futures contract on the Comex market in Chicago.
The yellow metal fell about 3% this week, as the danger of a trade war between the United States and China seems to be waning. Gold is up 14% since the beginning of 2019, benefiting from an uncertain international situation.
The recent calm on the front of the US-China trade war has removed some of its yellow metal luster, which has just experienced its worst week in two years. This is down more than 3% over the week, and about 6% since its peak in early September, when it had exceeded $1,560 an ounce. At that level, the “barbarous relic” was trading at its highest level for almost 6 years.
The attractiveness of gold as a safe haven has declined over the last month, however, as sovereign interest rates have rebounded, making bonds comparatively more attractive to investors looking for returns. Thus, the yield of the 10-year US Treasury (T-Bond), which had fallen to 1.53% in early September in the fear of escalating customs barriers, rose to 1.93% Friday night. This rate posted its best week in six years, with a rise of 0.22 point in 5 sessions.
Gold also suffered from the strengthening of the dollar (+1.3% this week), also linked to the prospect of a trade agreement between Washington and Beijing. Since commodities are traded in dollars, they become more expensive to buy for international investors who must first convert their currencies into dollars.
As for the yellow metal, despite its correction, it is still up 14% since the beginning of the year, supported by uncertainties on global growth and trade tensions as well as geopolitical unrest in countries like Iran and Hong Kong.