Gold Prices Struggle for Direction Despite Tariff Escalation
Investing.com - Gold prices underwent volatility on Friday after news that the U.S. is planning to slap another $100 billion tariffs on China.
Gold futures for June delivery on the Comex division of the New York Mercantile Exchange slipped $1.40, or around 0.1%, to $1,327.10 a troy ounce at 4:21AM ET (8:21GMT).
Having closed a day earlier at $1,328.50, gold traded Friday in a range from $1323.20 to $1,336.70.
Trump ordered trade representative Robert Lighthizer to consider additional tariffs on $100 billion of Chinese imports, escalating the trade conflicts between the world’s two largest economies.
In response, China’s state media said Friday that Beijing will defend its interests "against new U.S. actions". On Wednesday, the country also said it would levy a 25% tariff on about $50 billion of U.S. imports including soybeans, automobiles chemicals and aircraft.
Although gold is generally sought out as a safe haven store of value in times of political and economic uncertainty, markets have been jittery all week as the U.S. and China play tit-for-tat on tariff threats.
President Donald Trump's chief economic adviser Larry Kudlow said late Wednesday that proposed tariffs on China may not actually take effect and added that there is not a trade war between the U.S. and China.
The escalation of retaliatory threats have kept markets on edge as it is unclear whether the world’s two largest economies will sit down to negotiate or end up implementing their threats.
Easing downward pressure on gold prices, the dollar pared earlier gains mid-morning European trade on Friday as investors looked ahead to the monthly employment report and an appearance by Federal Reserve chief Jerome Powell.
At 4:22AM ET (8:22GMT), the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last up 0.12% to 90.23.
A stronger greenback makes the dollar-denominated metal more expensive for holders of other currencies.
With regard to the jobs report for March to be released at 8:30AM ET (12:30GMT), economists expect the creation of 193,000 nonfarm payrolls.
Signs of increasing wage growth in that report could underline the case for the Federal Reserve to raise interest rates at a faster pace.
Powell will have an opportunity to comment on the employment report when he speaks on the economic outlook at 1:30PM ET (17:30GMT).
Expectations of rising rates tend to boost the dollar by making the currency more attractive to yield-seeking investors. At the same time, gold suffers due to not only the weaker greenback but tends to be less attractive as a non-yield bearing asset with rates on the rise.
Elsewhere in metals trading, silver lost 0.55% to $16.265a troy ounce by 4:23AM ET (8:23GMT), platinum dropped 0.38% at $911.80 a troy ounce, palladium traded down 0.32% to $897.25 a troy ounce, while copper slid 1.41% to $3.031 a pound.
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