Gold Futures Pop Higher as Fresh China Tariffs Escalate Trade-War Fear

Gold Rises as more China Tariffs are issued

By Mark Decambre | April 4, 2018, 9:53 a.m. ET

Silver futures rise 0.5%

Gold rises as trade-war worries resurface

Gold futures jumped on Wednesday after China said it would impose tariffs of up to 25% on 106 American products such as soybeans, elevating tensions in a simmering trade clash between the U.S. and Beijing.

News of trade tensions provided a lift for gold and other havens that tend to attract bids in times of global uncertainty.

June gold GCM8, +0.16% advanced 1%, or $13.40, to $1,350.70 an ounce in early trade. The metal halted a string of consecutive gains in the previous session amid a rise in the equity market and easing global tensions.

Meanwhile, May silver SIK8, -0.68%  added 10 cents, or 0.6%, to $16.485 an ounce.

In exchange-traded funds, the SPDR Gold Shares ETF GLD, +0.31%  rose by 0.9%. The iShares Silver Trust SLV, -0.65%  added 0.5%, while the VanEck Vectors Gold MinersGDX, -0.05%  advanced 1.1%.

A slight weakening of the dollar also offered a runway higher for dollar-pegged commodities, as such softening can make those commodities more attractive to buyers using other currencies. The U.S. unit, as measured by the ICE U.S. Dollar IndexDXY, -0.13% was off a modest 0.1%.

Meanwhile, the Dow Jones Industrial Average DJIA, -0.04% fell 500 points, or 2.1%, at the open of trading on the trade tensions. The S&P 500 index SPX, +0.19%  was off 1%.

China’s announcement of proposed tariffs on 106 U.S. products comes after the Trump administration on Tuesday gave details on the $50 billion of Chinese goods that it plans to hit with 25% tariffs unless Beijing makes trade and investment concessions soon.

Beyond the trade skirmish, private-sector jobs increased by 241,000 in March, according to Automatic Data Processing Inc. That gain was well above forecasts from economists polled by Econoday, who had expected an increase of 185,000. This is the fifth straight gain above 200,000.

David Madden, market analyst at CMC Markets, said commodity traders may be ignoring the strength of the ADP report, which has a spotty history of accurately reflecting the more closely followed nonfarm payrolls report, due Friday.

“The ADP report is probably going to take a back seat to what’s going on in relation to the trade war,” he told MarketWatch. “We are very much in a risk-off mode, and traders are probably fearful.”

Separately, Markit released a report on service-sector activity for March, which came in with a fall to 54. That will be followed by the more closely watched ISM services data at 10 a.m. Eastern Time, with economists polled by MarketWatch forecasting a March reading of 59.0%. A reading of at least 50 implies improving conditions.

Source: Gold Futures Pop Higher as Fresh China Tariffs Escalate Trade-War Fear