Investing.com-- Gold prices rose in Asian trade on Monday, benefiting from increased haven demand amid signs of souring U.S.-China trade relations, while uncertainty over President Donald Trump’s tariff agenda also helped.
Broader metal prices also took some support from weakness in the dollar, after Federal Reserve Governor Christopher Waller said he supported lower interest rates later in the year.
Spot gold rose 0.8% to $3,315.68 an ounce, while gold futures for August rose 0.7% to $3,338.52/oz by 00:53 ET (04:53 GMT).
Gold rises as trade tensions boost havens
Gold and other havens advanced on Monday, as increased U.S.-China trade ructions and Trump’s threatening of higher commodity tariffs pushed traders out of risk.
China on Monday rejected Trump’s accusations that it had violated a recently signed trade deal, and warned that it will act to protect its national interests.
This came as Trump over the weekend accused China of violating a recent trade deal signed in Geneva, Switzerland, although his administration did not specify what was violated.
Trump’s administration had last week admitted that trade talks with China had stalled after the Geneva deal. This came as China kept up its criticism of U.S. controls on its chip industry, which it claimed undermined the Geneva agreement.
U.S.-China sparred saw traders lower their expectations that the two will reach a permanent trade deal in the coming months, while any further souring in trade tensions could see tariffs shoot back up.
Risk appetite was also rattled by Trump stating he will hike import tariffs on steel and aluminum to 50% from 25%, raising more concerns over the U.S. economy.
Dollar softens, metal prices gain as Fed’s Waller talks rate cuts
Broader metal prices were aided by some weakness in the dollar, after Fed Governor Waller said he still supported cutting interest rates later in the year.
Waller said that Trump’s tariffs had so far had little impact on the U.S. economy, and were unlikely to have a lasting impact on inflation. This, coupled with softer inflation and a robust job market, could give the Fed more confidence to cut.
But Waller warned that this still depended on tariffs settling towards the lower end of expectations. He also noted increased concerns over the U.S. economy, as seen during a recent Treasury rout.
The dollar retreated after his comments, falling 0.1% in Asian trade.
A softer dollar benefited most metal prices, with silver futures rising 0.6% to $33.220/oz. Platinum futures lagged, falling 0.5% to $1,050.10/oz.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.7% to $9,580.85 a ton.
Copper rose even as purchasing managers index data from China read softer for May, pointing to sustained economic weakness in the world’s largest copper importer.