Gold investors will continue examining the market reaction to US President Donald Trump’s response to a Chinese national security law for Hong Kong.
Spot gold climbed 0.9 per cent to $US1,734.70 per ounce by 1744 GMT on Friday, before Trump said his administration will begin to eliminate special treatment for Hong Kong in response to China plans to impose new security legislation in the territory.
US gold futures had settled up 1.4 per cent at $US1,751.70 prior to the comments.
However Trump did not say the first phase of the Washington-Beijing trade deal was in jeopardy.
Senior market analyst at broker OANDA, Edward Moya, believed the US-China spat would help gold investors.
“Markets are now strictly focused on the two largest economies and what is likely going to be a long, drawn-out battle,” said
“You’re going to continue to see safe-haven demand (for gold) because the uncertainty over how the US-China tensions are going to play out is extremely high.”
Mounting fears over the economic toll from the coronavirus, exacerbated by the widening US-China rift, and a resultant environment of low interest rates globally have put safe-haven bullion on track for an over 3 per cent monthly gain.
“Stock market gains are likely to cap gold’s upward momentum, however, gold prices have risen amid a risk-on environment and a risk-off environment,” said Standard Chartered Bank analyst Suki Cooper. “There is good downside support around $US1,700 and resistance around $US1,765.”
Wall Street’s main indexes fell on Friday, bolstering gold’s appeal.
Elsewhere, silver gained 2.5 per cent to $US17.86 an ounce. Prices were up 18.8 per cent for the month, the biggest gain since January 2012.
Global efforts to restart economies could boost silver demand, making prices of the metal, which slipped to an all-time low relative to gold during the crisis, likely to rebound strongly.
Palladium fell 1 per cent to $US1,911.54 an ounce. Platinum slipped 0.8 per cent to $US831.90 but was on track for its best month since August 2019.