Gold Silver Reports (GSR) – Global Gold Prices Shine as Trade War Fears Rattle Markets — Gold prices gained as much as 1% on Friday on a faltering dollar and equities as investors scurried to safety after US President Donald Trump moved towards long-promised anti-China tariffs, prompting a strict response from China amid fears of a global trade war.
Trump signed a presidential memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China, but only after a 30-day consultation period that starts once a list is published.
China urged US to “pull back from the brink”, while the Chinese commerce ministry unveiled plans to levy additional duties on up to $3 billion of US imports in response to the steel and aluminium tariffs.
Uncertainties around a possible trade war between US and China are driving some safe-haven buying, said Hareesh V, head of commodity research, Geojit Financial Services.
Spot gold was up 0.81% at $1,339.33 per ounce, as of 1.28pm. Earlier in the session, prices touched their highest since 20 February at $1,343.06, and were on track for their best weekly performance since the week of 16 February, rising over 2%. US gold futures for April delivery rose 0.9% to $1,339.50 per ounce.
“A trade war will harm both the US and Chinese economies… And any harm to the US economy will depreciate the dollar pushing gold higher,” said Ji Ming, chief analyst, Shandong Gold Group.
Against a basket of currencies, the dollar index was down 0.2% at 89.72. The yen hit a 16-month high against the dollar on Friday as concerns over rising global trade tensions triggered a bout of investor risk aversion.
Investor appetite for a safe-haven asset such as gold rises during times of geopolitical and financial uncertainties, and a weaker greenback makes the dollar-priced bullion less expensive for purchasers with other currencies.
“I think the prices will move higher again… If prices can stabilize above $1,360 that would be an early signal for a strong rally,” Hareesh said.
Stock markets slid on Friday and perceived safe havens such as government bonds and the yen gained.
Meanwhile, EU leaders were awaiting for the final word from Trump on whether the United States would apply tariffs to European steel and aluminium, said German Chancellor Angela Merkel, and warned of a firm response if he did.
“We opine that retaliatory tariffs will potentially create further more uncertainty over how global growth and trade may pan out into 2018, and could drag risk appetite further,” analysts at OCBC Bank said in a note.
Among other precious metals, silver climbed 1% to $16.52 per ounce, while platinum was 0.9% higher at $955.30 per ounce. Both the metals were on track to record their best weekly performance in five weeks. Palladium rose 0.2% to $981.97 per ounce. Neal Bhai Reports (NBR)
