Alaric Securities celebrates at Nasdaq MarketSite
March 2, 2018

Gold Gains as Trade-War Risk Roils Markets, but on Track for Weekly Loss

Alaric Securities

Dollar knocked back from 6-week high, stocks in retreat

Gold prices recovered on Friday as the threat of a global trade war pushed stocks and the dollar lower, sparking demand for assets such as precious metals, which are perceived as safer investments.

Industrial metals were also trading in volatile fashion, though broadly higher in a Friday rebound, as traders assessed the potential impact of tariffs, including the long-run impact on economic growth.

April gold GCJ8 rose $17.20, or 1.3%, to $1,322.50 an ounce. Gold prices had settled at their lowest levels of the year on Thursday, after recording the first monthly loss, in February, since October. The metal was weighed down as the U.S. dollar’s benchmark index held ground at six-week highs. Gold futures have lost around 0.6% this week.

“Gold is extending some of the gains it posted yesterday as concerns over a potential trade war brought the safe-haven back in fashion,” said Andreas Georgiou, investment analyst with XM. He noted that gold had pushed through a $1320 resistance zone.

May silver SIK8 rose 15 cents, or 0.9%, to $16.430 an ounce. Silver had touched a two-month low on Thursday. The silver-focused exchange-traded iShares Silver Trust SLV rose 0.5% and the SPDR Gold Shares GLD traded up 0.6% premarket.

Stock bulls and dollar holders are spooked by the news that President Trump has said he will sign orders next week imposing a 25% tariff on steel imports and a 10% tariff on aluminum. “You’ll have protection for a long time,” Trump told steel industry executives. Friday morning, Trump tweeted that a trade war would “good” and “easy.”

The dollar moved sharply lower after the Trump tweet, with the ICE U.S. Dollar Index DXY falling 0.4% to 89.957, pulling off the six-week highs scored this week on a fortified outlook for continued U.S. interest-rate hikes this year.

The stock selloff left the three main benchmarks down more than 2% on the week, on track to break a two-week run of gains.

Traders were also still assessing Federal Reserve Chairman Jerome Powell’s second round of congressional testimony on Thursday. The new central bank boss struck a less hawkish tone than during his appearance on Tuesday, but was still seen as leaving the door open for four rate rises in 2018. Higher interest rates are negative for gold because they raise bond yields, reducing the attractiveness of non-yielding gold, and tend to boost the dollar. But any indication that the Fed is behind the curve on inflation could prove supportive for gold’s use as a hedge.

A protracted trade war could push inflation up and growth down, scuttling Fed plans.

After a busy week in economic news, Friday offers up one major data release. The final reading on consumer sentiment for February is out at 10 a.m. Eastern. There were no Fed speakers on deck on Friday.

In other metals, May copper HGK8 gained 0.3% to $3.1325 a pound. April platinum PLJ8 rose 0.7% to $964.00 an ounce, remaining near the two-month lows hit this week. June palladium PAM8 gained 0.4% to $977.15 an ounce. Its settlement at $973.20 on Thursday was the lowest finish in nearly three weeks.

Platinum and palladium prices also declined this week as a German court reportedly ruled that cities have the right to ban diesel motors to improve air quality. Both metals are used in the automotive industry.

Article was originally published by Rachel Koning Beals at