Gold gains as Trump's tariff threat unnerves global markets

New York

GOLD prices climbed on Monday after US President Donald Trump threatened to raise tariffs on Chinese goods, escalating Sino-US trade tensions, which prompted risk-off sentiment and boosted safe-haven assets.

Spot gold was up 0.2 per cent at US$1,281.91 per ounce, as at 0805 GMT. US gold futures were up 0.2 per cent at US$1,283.20 an ounce.

"We have seen a bit of a risk-averse move this morning in Asian trading following the comments from Trump over the weekend regarding the US-China trade deal," ANZ analyst Daniel Hynes said.

"Certainly that has induced some safe-haven buying in gold and has jolted the (gold) market back into action."

United States president Donald Trump on Sunday announced he would hike tariffs on US$200 billion worth of Chinese goods this week.

He also said he would target a further US$325 billion of Chinese goods with 25 per cent tariffs "shortly".

This is a considerable shift in stance from the past week where he heralded that trade talks between the two countries were going "pretty well".

The comment 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 market now eyes further developments on the trade front, with Beijing's foreign ministry stating that its delegation was preparing to go to the United States in hopes that the two countries can meet half-way to resolve their dispute.

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

In the previous session, holdings of SPDR Gold Trust, the world's largest gold backed exchange, dropped 0.63 per cent to 740.82 tonnes, its lowest since Oct 11.

However, the metal truncated its weekly percentage decline on Friday instigated by investors covering their short positions and a fall in the dollar after US jobs data showed wage gains did not accelerate as expected.

"Having made a comeback on a weaker dollar last Friday, gold is poised to benefit strongly from safe-haven flows as investors dump stocks and rotate into bonds and precious metals," Jeffrey Halley, a senior market analyst with OANDA, said in a note.

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

Elsewhere, silver slipped 0.6 per cent to US$14.83 per ounce, while platinum fell 0.5 per cent to US$864.75 per ounce.

Palladium dropped 0.7 per cent to US$1,362.01 an ounce. REUTERS

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