Gold futures rose on Wednesday after China said it would impose tariffs of up to 25% on 106 American products such as soybeans and more, elevating tensions in a simmering trade confrontation between the U.S. and Beijing.
News of trade tensions provided a lift for gold and other havens that tend to attract bids in times of global uncertainty.
June gold
GCM8, +0.70%
popped 0.8%, or $10.20, at $1,347.50 an ounce in early trade, after the metal halted a string of consecutive gains in the previous session amid a rise in the equity market and easing global tensions.
Meanwhile, May silver
SIK8, +0.20%
added 8 cents, or 0.5%, to $16.470 an ounce.
In exchange-traded funds, the SPDR Gold Shares ETF
GLD, -0.75%
rose by 0.8%. The iShares Silver Trust
SLV, -1.21%
added 0.5%, while the VanEck Vectors Gold Miners
GDX, -1.44%
advanced 1.3%.
A slight weakening of the dollar also offered a runway higher for dollar-pegged commodities because a softening dollar can make commodities priced in the currency more attractive to buyers using other currencies. The U.S. unit, as measured by the ICE U.S. Dollar Index
DXY, -0.08%
was off a modest 0.1%. Futures for the Dow Jones Industrial Average
DJIA, +1.65%
were down 450 points, or 1.9%, and the S&P 500 index
SPX, +1.26%
off by 1.5%.
China’s proposed tariffs on 106 U.S. products such comes after Trump’s administration on Tuesday gave details on the $50 billion of Chinese goods that it plans to hit with 25% tariffs unless Beijing makes trade and investment concessions soon.
Beyond the trade skirmish, commodity investors are looking out for key economic reports ahead of Friday’s nonfarm-payrolls report. ADP’s report on private-sector employment in March is slated to hit at 8:15 a.m. Eastern.
Separately, Markit is set to release a report on the services-sector activity for March at 9:45 a.m. Eastern. That will be followed by the more closely watched ISM services data at 10 a.m., with economists polled by MarketWatch forecasting a March reading of 59.0%. A reading of at least 50 implies improving conditions.
Source : MTV
