Gold futures settled higher for a second straight session on Friday, helping prices to post a modest weekly rise, as the Trump administration increased tariffs on $200 billion in Chinese imports, a move that appeared to maintain selling pressure on riskier global markets and benefit haven precious metals.
The U.S. raised the import taxes on select goods from 10% to 25%, as the administration claims its Chinese counterparts reneged on commitments made in earlier talks. China has threatened to retaliate to the latest U.S.-imposed tariffs, yet talks were continuing Friday.
Gold for June delivery GCM9, +0.12% rose $2.20, or 0.2%, to settle at $1,287.40 an ounce. The precious metal marked its fifth gain in six sessions, according to FactSet data. For the week, prices based on the most-active contract climbed 0.5%.
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Gold gained modestly through the week, benefiting “from the reemergence of trade volatility, a factor the market had previously believed to be settled,” said Ryan Giannotto, director of research at GraniteShares, which offers the GraniteShares Gold Trust BAR, +0.08% “Notably, gold crossed back over into the green this week after previously having given up all of its yearly gains since its February 20 high of $1,346.80.”
The gain for the week was still only the second weekly rise for gold futures in seven weeks, FactSet data show.
“Should a trade resolution, or at least a new tariff truce be unobtainable, the negative response in the equity markets could reward gold as a safe-haven asset,” Giannotto told MarketWatch.
“Additionally, continued speculation over [Federal Reserve] policy remains a factor. “Despite the most recent Fed minutes intimating that a rate cut was off the table for 2019,” a survey from The Wall Street Journal Thursday found that a rate cut is still believed to be more likely than a hike as the Fed’s next move, he said. “Easier monetarily policy would likely be to gold’s benefit as a hybrid commodity-currency.”
The day’s U.S. CPI numbers “will guide expectations of traders and policy makers alike,” Giannotto said.
Rising rents and the higher cost of gas in April contributed to a sizable increase in inflation for the second month in a row, but price pressures more broadly appeared to pose little threat to the U.S. economy The consumer-price index rose 0.3% in April, the government said Friday.
In a speech Friday, New York Fed President John Williams said recent core inflation readings “are a touch too low,” but so far “appears mostly to reflect normal volatility” in the statistics. He said that current monetary policy “was in the right place.”
For now, “investors are buying into the safe havens as Trump’s tariff increases cast a shadow over the future global economic outlook,” said Jasper Lawler, head of research for London Capital Group.
Read: Here’s how hard the escalating tariff fight will hit the economy
U.S. benchmark stock indexes were sharply lower, heading for their worst weekly return so far this year.
“The global economy is in a fragile position as slowing global growth fears still linger,” Lawler said. “This latest move by Trump could accelerate any downturn and investors want to be protected from this. We could see gold continue to advance back towards $1,300 over the coming session.”
The dollar, as measured by the ICE U.S. Dollar Index DXY, -0.10% fell 0.2%, helping to lift demand for U.S.-priced gold by investors using other currencies.
Read: Why gold’s a ‘bargain’ at less than $1,300 an ounce
Among other metals, palladium was a standout, with the June contract PLM9, +1.72% up 5.3% to settle at $1,350.70 an ounce, though it lost 0.5% for the week.
Platinum group metals producers met at an event held by SFA Oxford at the Oxford University Museum of Natural History Friday and the talks confirmed that palladium is “in correction but that the market is still very tight,” said R. Michael Jones, president and CEO of Platinum Group Metals. “Platinum substitution from palladium is slow as automakers focus on meeting tougher standards and the need for [electric vehicles].”
July platinum PLN9, +1.87% also rose by 1.7% to $865.60 an ounce Friday, but suffered a weekly loss of 1.1%.
July silver SIN9, +0.01% added 0.1% to $14.79 an ounce, with the commodity posting a weekly loss of 1.3%. July copper HGN9, +0.20% rose 0.1% to $2.775 a pound, for a weekly decline of 1.6%.
Frank Holmes, chief executive and chief investment officer of U.S. Global Investors, recently told MarketWatch that he considers copper a “no-brainer buy at $2.65 a pound.”
Read: Copper may soon be a ‘no-brainer’ buy as supplies tighten
In a note Friday, however, Oliver Allen, assistant economist at Capital Economics, said “a total breakdown in U.S.-China trade talks would undoubtedly be a further negative for the prices of most industrial metals.” However, Capital Economics had already “expected a subdued global economy, and weak growth in China in particular, to send most [industrial] metals prices lower this year,” regardless of the latest tariff increase, he said.
Among metals-related exchange-traded funds, SPDR Gold Shares GLD, +0.19% added 0.2%. trading around 0.7% higher for the week. The VanEck Vectors Gold Miners ETF GDX, -0.73% fell 0.1%, while the iShares Silver Trust SLV, +0.07% was up 0.3%.
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