Gold Holds Gains Amid Trade Tensions and Market Tightness
Gold prices steadied after touching a new record high, as geopolitical concerns and short-term market constraints continue to support haven demand.
Trade War Worries Fuel Haven Demand
Gold initially rallied as much as 1.4% to exceed $2,882.36 an ounce before trimming gains. Tensions between the U.S. and China over trade have stoked safe-haven demand for the precious metal.
Supply Chain Squeeze Impacts Market
There are indications of increased gold demand from major dealers positioning their metal in the U.S. before potential tariffs are imposed. Lease rates in London have surged to around 4.7%, reflecting the premium for short-term borrowing of gold.
Physical Gold Flows Strong
The rush for physical gold has led to queues at the Bank of England, where central banks store reserves. Gold has also been flowing into Comex depositories in New York, adding to market tightness.
Central Bank Intervention Possible
Market analysis suggests that the lack of suitable gold bars for Comex delivery (400-ounce bars vs. 100-ounce or kilobars) may necessitate refining. If the situation becomes severe, authorities could potentially intervene by lending out gold.
Dollar Weakness Supports Gold Prices
A weaker U.S. dollar makes commodities like gold more affordable for global buyers. This has contributed to the rise in gold spot prices, which gained 1% to $2,873.69 an ounce as of 12:40 p.m. EST.
Other precious metals, including silver, platinum, and palladium, also experienced gains.