Gold rises more than 1% on renewed US-China trade tensions

[NEW YORK] Gold prices rose more than one per cent on Monday as the US dollar softened and China raised tariffs on US products, escalating global trade tensions.

China imposed extra tariffs of up to 25 per cent on 128 US products including frozen pork and wine in response to US duties on imports of aluminum and steel.

With many major European financial centers closed for Easter Monday, spot gold added 1.4 per cent at US$1,342.46 per ounce by 1.34pm EDT (1734 GMT), earlier reaching a US$1,342.97 session high. It recorded its third straight quarter of gains on Friday.

US gold futures for June delivery settled up US$19.60, or 1.5 per cent, at US$1,346.90 per ounce.

"Increased geopolitical tension highlighted by China and their retaliation and where this could end up is supporting gold today," said Jeff Klearman, portfolio manager at GraniteShares.

Gold is often used as a store of value during times of financial or political uncertainty.

"Last week we saw GDP revised up 2.9 per cent (versus expected 2.7 per cent) which can be another indicator that US and global growth is doing well. Combine that with a trade war and you could have inflation concerns supporting gold," Mr Klearman added.

A weaker US dollar generally boosts the price of gold. The US dollar index, eased against a basket of six other major currencies.

"A sizeable net long position in gold is also helping prop things up," said Joshua Graves, senior commodity strategist at RJO Futures in Chicago.

Gold speculators raised their net long position by 50,996 contracts to 172,834 contracts in the week to March 27, US Commodity Futures Trading Commission data showed on Friday.

Gold fell 1.7 per cent last week in its biggest such drop since early December. But it climbed 1.7 per cent in January-March, posting its third straight quarterly gain.

"Look for gold to break above the US$1,337 level for further momentum. Support appears around the US$1,325 area. It is difficult not to be bullish in the current panorama," said Kitco Metals' Global Trading Director, Peter Hug.

In other precious metals, spot silver climbed 2.1 per cent to US$16.66 per ounce.

Platinum rose 0.6 per cent at US$933.60 per ounce, having fallen to its lowest since Dec 29 in the previous session.

"The global platinum market showed a substantial supply surplus in 2017 and is also likely to remain oversupplied in 2018," said Commerzbank, adding there was therefore little potential for platinum to recover.

Palladium lost 1.8 per cent at US$934.10 an ounce after dropping to US$928, its lowest since Oct 10.

REUTERS