Gold had its best monthly performance since January, rising over 2.0% due to increasing trade fears and plunging stocks, particularly at the end of the month. Silver, which started to gain momentum the last week of May, could not regain its earlier losses and finished the month down 0.60%. Platinum and palladium finished down 11.1% and 1.8% respectively.
Precious metals spent the month stuck in the middle of a volatile tug of war between a soaring US dollar on one side and increasing trade fears and falling equity prices on the other. For most of the month, the U.S. dollar was winning; reaching a two-year high while pushing gold and silver to $1,270.00 and $14.37, nearly its lowest for the year.
Relations between the US and China negatively impacted the beginning of May, after talks early in the month produced no agreement and left both Presidents Trump and Xi pessimistic about reaching a solution in the near future. Furthermore, both countries continued to increase tariffs against the other. Towards the end of May, President Trump added a new country to the trade war mix by proposing a 5% tariff on all Mexican exports to the US which caused stocks to plunge and gold to spike. On May 31, after already declining the majority of May, the Dow dropped 355 points to finish below 25,000 for the first time since January. The Dow and S&P500 both dropped 6.7% in May, while Nasdaq finished down 8.0% for the month.
Gold soared almost 1.5% on May 31 as plunging stocks and increasing trade tension ultimately beat the U.S. dollar in influencing precious metals. The escalation of trade fears and falling equities seen in May will make June’s FOMC meeting particularly important. Many believe that the Fed can no longer outright reject rate cuts while others believe the economy is in good shape and May’s performance isn’t indicative of its current state. Either way, whether through rate cuts or increasing trade tension and subsequent stock sell-offs, gold is poised to potentially continue its recent success in the coming months.