Gold rises as Wall Street falls due to trade war with China
By Barani Krishnan
Investing.com – More China troubles, albeit of a tech kind this time, are supporting gold as it seeks a return to $1,300.
Bullion and futures of gold hit more-than-two-week lows on Monday, breaking further from last week’s bullish $1,300 levels, before rebounding as stocks on Wall Street fell on heightened fears for the tech sector due to the White House’s blacklisting of Chinese telecom giant Huawei.
Spot gold, reflective of trades in bullion, traded at $1,277.70 per ounce by 3:05 PM ET (19:05 GMT), down 11 cents on the day.
But gold futures for June delivery, traded on the Comex division of the New York Mercantile Exchange, settled up $1.60, or 0.13%, at $1,277.30 per ounce.
Google’s (NASDAQ:GOOGL) decision to discontinue licensing for Huawei was a major factor for a 1.6% drop in the Nasdaq Composite. It stoked fears about a hit to the broader technology sector and ratcheted-up trade tensions between the world’s two largest economies. Shares of Google parent Alphabet were off nearly 2% late Monday.
The U.S.-China trade war has been one of the pillars of support for gold this year as investors used the yellow metal as a safe haven in times of both economic and political troubles.
Bullion reached a one-month peak of $1,303.35 last Tuesday after China countered higher U.S. tariffs on its goods by announcing duty hikes of its own on American merchandise. June gold soared to a one-month high $1,304.15 the same day.
“In trying to offset the risks the trade war brings, the People’s Bank of China is likely to introduce further monetary stimulus, which could lead to further weakness for the renminbi,” said Fawad Razaqzada, analyst at Forex.com in London. That proposition that could strengthen gold, Razaqzada said.
The dollar index, which measures the greenback against a basket of six currencies, was flat at 97.768 after hitting a one-month high of 97.88 earlier in the session.
Like gold, the dollar has also provided insurance against the U.S.-China trade war. Still, gold has an advantage over the dollar in the trade dispute. A positive resolution in the form of a trade agreement could see jewelry and other bullion-related consumption rise in China.
Trades in other Comex metals as of 2:15 PM ET (18:15 GMT):
Palladium futures up $23.35, or 1.8%, at $1,329.15 per ounce.
Platinum futures down $5.15, or 0.6%, at $815.15 per ounce.
Silver futures up 7 cents, or 0.5%, at $14.45 per ounce.
Copper futures down 1 cent, or 0.5%, at $2.73 per pound.
Source: Investing.com
