Gold futures rose firmly on Friday as investors fled to the perceived safety of havens like precious metals amid fresh signs of escalation in tariff tensions between the U.S. and its global trade partners.
The U.S. “intending to impose trade tariff on Mexico, Germany and other eurozone nations apart from China will be bullish for gold,” said Chintan Karnani, chief market analyst at Insignia Consultants.
Also, the “investment world is filled with speculation that China is preparing to retaliate over the Huawei issue. Rare earth exports to [the U.S.] could be stopped in extreme circumstance,” he said.
Gold for August delivery on Comex GCM19, +1.31% rallied by $16.20, or 1.3%, to $1,308.60 an ounce, putting the metal on track for the highest finish for a most-active contract since April 10, FactSet data show. The gains put prices, based on the most-active contracts, on pace for nearly 2% weekly gain, and a 1.8% advance for the month.
July silver SIN19, +0.61% meanwhile, added 16.4 cents, or 1.1%, to $14.655 an ounce, and was on pace for a weekly rise of 0.7%, but traded down 2.2% for May.
The moves for the metals come as President Donald Trump announced in a tweet that the U.S. would impose a 5% tariff on all goods from Mexico until that country stops the flow of illegal immigrants into the country. He said the tariffs will rise to 10% on July 1 if the crisis persists, and by another 5% for every successive month, up to 25% by Oct. 1.
The announcement comes amid reports from Chinese state-owned media threatening fresh retaliatory measures in Beijing’s tariff spat with the U.S. That action comes as data from the second-largest economy in the world showed manufacturing activity slipped into contraction. China’s manufacturing purchasing managers’ index dropped to 49.4, with any reading below 50 reflecting contracting conditions.
Worries about intensifying trade clashes have been a key support for gold prices over the past few weeks, driving demand for gold and government debt alike.
The exchanged-traded gold fund, the SPDR Gold Shares GLD, +1.25% has gained 1.2% for the week, with a 1.3% gain in sight for the month. However, the silver-focused iShares Silver Trust SLV, +0.63% was set for a 0.1% weekly rise and drop of 2.5% in the month to date.
Both the Dow Jones Industrial Average DJIA, -1.08% and the S&P 500 indexSPX, -1.07% were down sharply Friday, as investors exit assets considered risky in favor of so-called havens. In bonds, the yields on the 2-year U.S. Treasury noteTMUBMUSD10Y, -2.44% and 10-year Treasury note TMUBMUSD10Y, -2.44% tumbled, also providing support for non-yielding gold.
Among other Comex-traded metals, July copper HGN19, -0.53% fell by 0.1% to $2.65 a pound, with the contract down 8.8% for the month. July platinumPLN19, +0.04% was flat at $794.10 an ounce, trading about 11% lower for the month. The most-active September palladium contract PAU19, -2.46% lost 2% to $1,338.10 an ounce, poised for a weekly decline of 3%.
By Myrap. Saefong & Mark DeCambre – marketwatch.com
