Gold edges up on concerns about US-China trade tensions

Bengaluru — Gold edged higher on Friday and was en route for a weekly gain, supported by trade concerns after the US hiked tariffs on Chinese goods in the middle of crucial trade talks between the two countries.

Spot gold was up 0.1% at $1,285.03 an ounce at 10.01am GMT and is up about 0.5% so far this week. US gold futures were steady at $1,285.60 an ounce.

“Tensions in the Middle East and also the trade disputes between the US and China are supporting gold at the moment,” said Afshin Nabavi, senior vice-president at MKS. “But the market continues to be range-bound at about $1,275 on the downside and about $1,292 on the upside. We have been having quite a bit of resistance around the $1,290 level,” he added.

The US escalated a tariff war with China on Friday by hiking levies to 25% for $200bn worth of Chinese goods, and Beijing said it would strike back. The tariff hike came in the middle of two days of talks between top US and Chinese negotiators.

Adding to global anxiety, US bombers have arrived at a US base in Qatar. The bombers have been sent to the Middle East to counter what Washington describes as threats from Iran.

Meanwhile, world stocks rose on Friday, but were still set for the worst weekly performance since late December 2018 due to an escalation in the US-China trade dispute.

“Stock markets are rebounding despite Donald Trump’s tariffs on $200bn worth of Chinese imports, confirming that investors are still trying to keep alive the bullish sentiment,” Carlo Alberto De Casa, chief analyst with ActivTrades wrote in a note.

“In this scenario, gold is, once again, close to the first resistance area, placed at $1,288. A clear and solid return above $1,290 would also denote the break-out of the bearish trend line that has marked the last few months.”

Meanwhile, palladium rose 1.52% to $1,313.11 an ounce, having dropped as much as 4% in the previous session to its lowest since January 4 at $1,263.85.

“The price slide temporarily made palladium cheaper than gold again for the first time since the start of the year,” Commerzbank analysts said in a note. “Technical selling could push the price down even further, given the increasingly gloomy technical picture.”

Silver was up 0.1% at $14.77 an ounce, while platinum rose 1.8% to $858.93. Silver is on course to register a second straight week of declines, while platinum looks set for a third weekly drop in a row.