Gold returns above $1,500 as yield curves invert

Wednesday, 14. August 2019 12:51

Rate pain and recession angst sent stocks tumbling on Wednesday on both sides of the Atlantic as investors rushed to preserve value by buying assets perceived to have smaller risk. Government bonds of Germany, the United Kingdom and the United States benefited the most while gold and silver jumped, reversing earlier declines as yesterday's risk appetite was erased. Market participants have initially cheered the rapprochement between the administration in Washington and China as a trade war truce was agreed.

A swing toward policy easing bias in major central banks has been pressuring sovereign yields and interest rates overall. It helped lead the US yield curve to inversion in the section between two and ten years and the same occurred for British securities. The fall in borrowing costs impacts banks and the financial sector, which spills over to other sectors and the entire economy. The yen and the Swiss franc also gained.

Gold advanced 0.43% to $1,507.92 per ounce at 12:50 pm CET, returning above the psychological $1,500 level. Silver jumped 0.99% to $17.13 for one troy ounce. Platinum and palladium, precious metals which are mostly used in the automotive industry, lost 0.49% to $851.06 and 0.76% to $1.445.72 per ounce.

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