Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE
Gold Refinery gold shavings. Picture: AFP PHOTO/OZAN KOSE

Bengaluru — Gold prices climbed on Monday after US President Donald Trump threatened to raise tariffs on Chinese goods, escalating Sino-US trade tensions, which prompted investors to sell riskier assets and boost safe-haven bullion.

Spot gold was up 0.2% at $1,281.63 an ounce, as of 9.30am GMT. US gold futures also gained 0.2% to $1,283.20 an ounce.

US President Donald Trump on Sunday announced he would hike tariffs on $200bn worth of Chinese goods this week. He also said he would target a further $325bn of Chinese goods with 25% tariffs “shortly”, essentially covering all products imported into the US from China.

“We are seeing the markets reacting to uncertainty about trade talks. It is creating some nervousness in the markets. The dollar is a tad stronger, countering some of the potential moves we would have seen otherwise in gold,” said Ole Hansen, commodity strategist at Saxo Bank.

Trump’s comments dented global shares and oil prices, while boosting the yen, which like the yellow metal, is considered a safe haven during times of a geopolitical or global economic turmoil.

“The hedge fund community is extremely confused, flipping long and short positions. $1,290 is the key level for gold, and if prices break above that we could see quite an addition on the long side,” Hansen said.

Hedge funds and money managers switched to a net long position in Comex gold in the week to April 30, the US Commodity Futures Trading Commission (CFTC) said on Friday.

Last week, the mood among gold investors had turned gloomy, pushing the metal to a four-month low after the US Federal Reserve chair Jerome Powell dashed hopes of a rate cut this year.

“Despite the increase in gold prices (on Monday), technical analysis suggests that downward pressure on the yellow metal continues to manifest,” OCBC analysts said in a research note, adding that most of the intra-day move was likely related to covering short positions and hedging against market risks.

“The medium term still suggests a large range-bound consolidation of $1,270 to $1,300.”

Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold backed exchange, were at their lowest since October 11. Holdings fell 0.6% on Friday.

However, physical demand for the metal had been robust last week with India and Singapore leveraging the correction in prices ahead of a key gold-buying festival.

Elsewhere, silver slipped 0.5% to $14.85 an ounce, while platinum fell 0.6% to $863.94 an ounce.

Palladium dropped 0.6% to $1,363.40 an ounce. 

Reuters