June 10, 2019

What the Heck Is Going on with Gold?

Gold has been a confusing trade over the past few weeks, to say the least.  Why would gold rally the way that has when the stock market is continuing to surge?  The most direct reason is that this is a currency play.  We have written a number of times outlining why this is the case.  But one factor has been left out.  China.

China continued its renewed (public) gold-buying spree in May adding almost 16 tons of the precious metal to its reserve – the biggest monthly increase since January 2016.

“It’s a diversification away from the U.S. dollar, particularly given the trade tensions and the potential technology cold war that’s evolving,” said Bart Melek, global head of commodity strategy at TD Securities.

“We have to remember that gold is nobody’s liability.”

Follow me on Twitter: @MikeShorrCBOT

about the author:

Mike Shorr

Since 1994, Michael has been an on-the-floor market maker, Vice-President of Interest Rate Derivatives for Knight Financial Products and Director of Education and Options Instructor at Trading Advantage. He makes the oftentimes complex world of options and trading accessible to the novice and advanced trader alike. Michael has a Bachelor of Science degree in Statistics and Finance from the University of Illinois Champaign-Urbana. He presently is Director, Trader Education at ProsperTradingAcademy.

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