Investors Preferring U.S. Dollar Over Gold Amid Trade Wars

Washington (June 3)  As U.S. President Donald Trump turns his attention to Mexico from China in the latest tariff-for-tariff battles, investors are clamoring for more cash in the form of U.S. dollars rather than traditional safe-havens like gold.

Other geopolitical risks outside the U.S. in addition to the trade spats, however, should keep gold prices in check, according to some analysts.

“The on-going trade war between the US and China, in addition to political developments across Europe should see the metal remain firm,” said Swiss refining and finance group MKS Pamp.

“[But] at the moment,” says a column at the Financial Times, “the [US Dollar] — and not bullion — is seen as the best place to warehouse cash as the trade war between the US and China escalates.”

Gold-backed ETF plays can be had with the SPDR Gold Shares (NYSEArca: GLD) and SPDR Gold MiniShares (NYSEArca: GLDM), while short-term traders can also play the gold market through miners with the VanEck Vectors Gold Miners (NYSEArca: GDX), Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG) and the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT).

What could spur a gold rally is a trigger event like a rate cut by the central bank.

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