Gold prices clawed up from a two-week low on Friday, with the metal generally tethered to the dollar this week, yet supported by persistent global political and trade tensions given the metal’s haven-asset status.
Trading across financial markets was subdued, with the indecisive action coming amid more expected turmoil in the Trump administration. Media reports said the president was planning to sack his national security adviser H.R. McMaster, which would be the second high-profile firing from the White House this week. Secretary of State Rex Tillerson was fired on Tuesday and replaced with CIA Director Mike Pompeo.
While personnel issues unfold, concerns over a possible trade war between the U.S. and key trading partners were still weighing on investors’s minds as well, analysts said. The White House said on Wednesday it will seek to trim the U.S.’s trade deficit with China by $100 billion, using tariffs. The European Union, meanwhile, was working to get the bloc exempt from the tariffs.
Early Friday, April gold GCJ8, +0.18% rose $3.00, or 0.2%, to $1,320.80 an ounce. Its finish at $1,317.80 an ounce Thursday was the lowest since March 1 and sets up the contract to finish the week down 0.2%, according to FactSet data.
The ICE U.S. Dollar Index DXY, -0.19% was down 0.2% at 89.957 and down about 0.2% for the week. The index had churned in and out of positive territory. Gold and the dollar typically move inversely. A weaker U.S. currency makes dollar-denominated gold more attractive to investors using another currency; the reverse is true as well, with a steeper dollar typically weighing on gold.
“It is noticeable that the worst-performing currencies were the commodity currencies. These are getting hit in anticipation that the U.S. will target China more directly with a variety of specific trade restrictions, which could dampen Chinese demand for metals and other commodities,” said Marshall Gittler, chief strategist at ACLS Global.
“In that respect, a trade war could boost [the U.S. dollar], although I don’t think the Chinese would stand by idly and let this happen without any retribution – I think it would be likely to rebound on U.S. trade quickly, well before it helped to boost U.S. production and thereby narrow the trade deficit,” Gittler said.
The market has been confined in a relatively tight range and so, gold market-timers looking for a buy signal need a clearer bearish sign, writes Mark Hulbert in his latest column.
“That’s because there still isn’t the widespread despair and pessimism that typically precede tradable gold rallies,” he wrote.
But once that signal emerges? “Consider the average recommended gold-market exposure level, as measured by the Hulbert Gold Newsletter Sentiment Index (HGNSI). March 2017 was the last time this average got close to the minus 30% level that have accompanied significant past bottoms. Gold bullion rose 8% over the subsequent three months,” he said.
Read: Here’s the ideal amount of gold to keep in your investment portfolio
Meanwhile, May silver SIK8, +0.26% tipped 0.3% higher, tacking on 5 cents, to $16.47 an ounce. It is headed for a nearly 0.9% weekly loss, according to FactSet.
May copper HGK8, +0.34% rose 0.3% to $3.1375 a pound. April platinum PLJ8, -0.17% lost 0.1% to $955.70 an ounce, while June palladium PAM8, +0.06% was flat near $981 an ounce.
Among exchange-traded funds, the silver-focused exchange-traded iShares Silver Trust SLV, -1.02% rose 0.6% and the SPDR Gold Shares GLD, -0.64% was down 0.3%. The VanEck Vectors Gold Miners ETF GDX, -1.29% shed 0.4%.