Gold climbed on Friday with U.S.-China trade relations possibly on the back foot again, but bullion registered its worst month since September as positive data about the U.S. economy dulled interest in haven assets.
Gold for February delivery GCG20, +0.66%, the most active contract on Comex, on Friday gained $7.40, or 0.5% at $1,460.8 an ounce. The precious metals ended $54.00 lower on the month to date, or down 3.5%, it worst month since September, according to Dow Jones Market Data.
March silver SIZ19, +0.34% gained 14 cents, or 0.8% at $17.055 an ounce, but was down 5.6% on the month to date Friday.
Gold has been trading in a range between $1,450 and $1,485 for most of November, after investors shrugged off fears of a looming U.S. recession and major stock indexes pushed to new records on optimism about prospects for a trade deal between Washington and Beijing.
Fresh uncertainty about global economic growth and international trade put a damper on U.S. stocks Friday, in holiday-thinned trading, as investors worried about the deterioration of U.S.-China trade relations after a bill supporting Hong Kong protesters was signed by President Trump late on Wednesday.
“Going into year end, the key themes to watch will be how interest rates move, if and how trade tensions resolve and finally where the USD goes in terms of gold pricing,” said Kathryn Kaminski, chief research strategist and portfolio manager at AlphaSimplex Group, in an email to MarketWatch.
“These three forces are all in play, if any one of them becomes dominant we could clearly see gold prices move strongly in either direction.”
In other haven assets, the 10-year Treasury note yield TMUBMUSD10Y, +0.73% rose to 1.774%, as investors eyed a deluge of coming corporate bond issuance in December.
Concerns around trade flared up again Thursday after President Donald Trump signed legislation supporting Hong Kong protesters, a point of contention between the U.S. and China. In response, Chinese officials summoned the U.S. ambassador and called the new law as interference in its domestic affairs.
Investors fear this could undermine chances for concluding a trade deal between the two countries ahead of a Dec. 15 deadline for a new round of U.S. tariffs on Chinese goods.
Reuters reported on Friday that the U.S. was considering regulations to further restrict China’s Huawei telecom equipment provider, a move that could stoke trade tensions further.
“We start a whole new game of calling each-other’s bluff – and one where the U.S. can see that China either doesn’t want to, or can’t, retaliate as aggressively as it threatens,” wrote Michael Every, senior strategist at Rabobank.
In other metals trade, January platinum PLF20, +0.27% gained $4.60, or 0.5%, to $900 an ounce, while March copper HGZ19, -1.35%, now the active contract, added 0.8%% at $2.696 a pound after data showed China’s economy slowing for the seventh month in a row.
Profits at Chinese industrial firms fell the most on record in October, dropping 9.9% from a year ago, data from the National Bureau of Statistics showed Wednesday.