Gold gains as uncertainty over Trump's response to China spurs demand

[BENGALURU] Gold rose 1 per cent on Friday as caution set in with investors awaiting US President Donald Trump's response to a Chinese national security law for Hong Kong and its potential impact on an already fragile global economy.

Spot gold climbed 0.9 per cent to US$1,734.70 per ounce by 1.44pm EDT (1744 GMT).

US gold futures settled up 1.4 per cent at US$1,751.70.

"Markets are now strictly focused on the two largest economies and what is likely going to be a long, drawn-out battle," said Edward Moya, a senior market analyst at broker Oanda.

"You're going to continue to see safe-haven demand (for gold) because the uncertainty over how the US-China tensions are going to play out is extremely high."

Mounting fears over the economic toll from the coronavirus, exacerbated by the widening US-China rift, and a resultant environment of low interest rates globally have put safe-haven bullion on track for an over 3 per cent monthly gain.

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"Stock market gains are likely to cap gold's upward momentum, however, gold prices have risen amid a risk-on environment and a risk-off environment," said Standard Chartered Bank analyst Suki Cooper. "There is good downside support around US$1,700 and resistance around US$1,765."

Wall Street's main indexes fell on Friday, bolstering gold's appeal.

Elsewhere, silver gained 2.5 per cent to US$17.86 an ounce. Prices were up 18.8 per cent for the month, the biggest gain since January 2012.

Global efforts to restart economies could boost silver demand, making prices of the metal, which slipped to an all-time low relative to gold during the crisis, likely to rebound strongly.

Palladium fell 1 per cent to US$1,911.54 an ounce. Platinum slipped 0.8 per cent to US$831.90 but was on track for its best month since August 2019.

REUTERS