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Gold Extends Gains as US Raises Tariffs on Chinese Imports

May 10, 2019 at 14:36 by Andrew Moran

Gold futures are extending their gains at the end of the trading week, etching out a tepid weekly gain. Gold prices have been able to hold onto their advances, despite the US government raising tariffs on Chinese imports, a move that would effectively impact the world’s two largest economies and global equities market. While this should lift gold to monthly highs, the yellow metal has not exactly been the safe-haven asset throughout the crisis, likely because a trade war would hurt metal demand.

June gold futures tacked on $2.00, or 0.16%, to $1,287.20 per ounce at 14:03 GMT on Friday. Gold has advanced in five of the last six sessions, posting a weekly gain of about 0.5%. Year-to-date, gold is still down by less than 1%.

Silver, the sister commodity to gold, is flat to finish the trading week. July silver futures remained unchanged at $14.775 an ounce. The white metal headed in the opposite direction this week, recording a 1.1% weekly loss, which is its second straight week of declines. So far this year, silver prices have plunged more than 6%.

On Friday, US tariffs on $200 billion worth of Chinese imports increased from 10% to 25%. Beijing has threatened to retaliate with countermeasures, but it remains unclear what the world’s second-largest economy will do. US-China trade talks are expected to resume on Friday.

President Donald Trump has urged everyone to not “rush” into a trade agreement, tweeting:

The U.S. only sells China approximately 100 Billion Dollars of goods & products, a very big imbalance. With the over 100 Billion Dollars in Tariffs that we take in, we will buy agricultural products from our Great Farmers, in larger amounts than China ever did, and ship it to poor & starving countries in the form of humanitarian assistance.

He added that the import levies will generate “far more wealth” than a conventional trade deal.

The US dollar is tanking on the development as the greenback tumbled 0.25% to 97.17, raising its weekly loss to 0.4%. A weaker buck is good for dollar-denominated commodities because it makes it cheaper for foreign investors to purchase.

On the data front, the inflation rate climbed 0.3% last month, higher than the median estimate of 0.2%, according to the Bureau of Labor Statistics (BLS). Also, core inflation rose 0.1% in April, matching market expectations.

In other metal markets, July copper futures dipped $0.005, or 0.23%, to $2.765 per pound. July platinum futures edged up $7.40, or 0.87%, to $858.80 an ounce. July palladium futures soared $33.00, or 2.57%, to $1,316.00 per ounce.

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