Markets and Apple plunge
Gold is attracting increased bids amid growing concerns of a global slowdown. The latest data points that corroborate these fears came from Apple’s (AAPL) guidance cut. Yesterday, Apple warned that its first-quarter sales could be lower than previously expected. The company blamed the slowing Chinese economy for its reduced guidance, intensifying concerns about a global slowdown.
While Apple was down 8.8% at 10:00 AM EST, the S&P 500 Index (SPY), the Dow Jones Industrial Average (DIA), and the NASDAQ Composite Index (QQQ) were down 1.6%, 1.86%, and 2.11%, respectively. The SPDR Gold Shares ETF (GLD), on the other hand, was up 0.50% due to a weaker risk appetite in the market.
Slowdown concerns for China
Investors have already been digesting a weaker-than-expected manufacturing report from China. China’s Caixin/Markit manufacturing PMI (purchasing managers’ index) contracted for the first time in 19 months in December. The PMI value for December was 49.7 compared to 50.2 in November. The world is closely watching Chinese economic data for signs of a slowdown.
Gold gaining bids
Gold (GDX) gained 7.5% in the fourth quarter of 2018 on concerns of a global slowdown, the ongoing trade conflict between the United States and China (FXI), expected earnings deceleration, and tightening monetary policy. Currently, gold prices are trading close to $1,290 per ounce and are inching closer to the key psychological level of $1,300.
Read Is Gold Ready to Fly in the New Year? for more on our outlook for gold in 2019. As we highlighted in Bulls versus Bears on Wall Street: Time to Buy Gold in 2019? most Wall Street analysts are bullish on gold’s prospects for 2019.