Gold went down in price to $30 an ounce, having fallen 1.5% on Thursday, and US Treasuries tumbling the most since summer, although the two equities had been providing economic protection over the past year, Bloomberg reported adding such a beat-down hadn’t occurred out of nowhere.
The edition added the day’s moves are against the backdrop of a certain truce in the US-China trade war.
“If you’re priced for a pretty direct move into recession, which is what bonds, the yield curve, and some, but not all US data, were pointing to late in the summer, suddenly you’re walking that back and saying not only will you not see a recession, but actually a pick-up in growth”, said George Pearkes, macro strategist at Bespoke Investment Group.
“There are going to be days like these,” he added.
Sovereign bonds dipped around the world, with their global stock of sub-zero yields plummeting to around $12.5 trillion.
Rates on benchmark 10-year French and Belgian securities went back above 0% for the first time in months, while the German equivalent surged 10 basis points despite remaining negative.
In the Asia Pacific region, the Japanese yen, which is also often turned to during recessions, weakened below 109 yen to the dollar, while the country’s benchmark bond yield is poised for its biggest weekly increase in several years.
“A large stock of positioning in precious metals has been built up on the long side, driven especially by ETF flows”, said Naufal Sanaullah, chief macro strategist at EIA All Weather Alpha Partners, adding real yields declined on the Federal Open Market Committee (FOMC) but “have reversed that bounce”.
“Now metals are cracking important technical levels. So we believe precious metals have more downside to come”, the financial strategist remarked.
Meanwhile, the UN Conference on Trade and Development found that the trade war between the United States and China has crippled both sides resulting in higher prices for consumers and prompting countries around the world to stock up their gold bullions.
The buy-up recently enabled Russia to enter the global top five holders of gold taking the 4th spot, with the US ranked first with some 8,130 tonnes and Germany - second with 3,370 tonnes.
For the time being, the US and China are readying to sign the so-called Phase One interim trade deal announced by POTUS Trump in October.
Per a fresh Politico report, Beijing is pushing the White House to cancel the next round of trade duties, scheduled for December, including the earlier round of trade penalties imposed in September.
Beijing is also purportedly expecting a 25 percent tariff to be retrieved, or at least cut in half, on an additional $250 billion worth of Chinese goods, although the Phase One deal doesn’t include the step at the present moment, the edition concluded.
