Akos Stiller/Bloomberg
Gold futures traded higher Friday, giving up earlier declines, as U.S. tensions with Russia and China fed the precious metal’s investment appeal, setting prices up for a second straight weekly climb.
“The end of the week is looking a little quieter in some respects and yet, with geopolitical risk heightening in recent days and first-quarter earnings season getting under way, it’s unlikely to be entirely peaceful,” said Craig Erlam, senior market analyst at Oanda. “Given the backdrop of a trade conflict with China and rising tensions with Russia over Syria, any rallies [in risk-on markets] may be somewhat gradual and dependent on the situations not deteriorating further.”
June gold rose $5.90, or 0.2%, at $1,339.90 an ounce. Gold was set to log a roughly 0.9% gain for the week, according to FactSet data. Prices had climbed nearly 1.1% on Wednesday to the highest finish since late January, only to fall back by 1.3% Thursday.
Overall, it’s been a “roller coaster for gold prices” said Will Rhind, chief executive officer of ETF company GraniteShares.
“Gold shot up on Wednesday primarily on the back of U.S. talk of airstrikes and sabre rattling with Russia and Syria,” he said. Gold prices then fell Thursday as “fears of imminent airstrikes and military action in Syria receded on the back of President Trump’s tweet clarifying that the timeframe could be ‘sooner or much later’.”
“Gold has been rising steadily this year and if the recent volatility in global markets continues, we expect prices to respond favorably,” said Rhind.
Expectations for more gold-negative interest-rate hikes this year were backed by Federal Reserve meeting minutes released late Wednesday, which fueled the pullback in gold prices Thursday. Hawkish comments in a speech early Friday from one Federal Reserve regional bank head added to that tone.
Higher interest rates can boost the dollar and dull demand for dollar-denominated commodities, although some camps will always consider gold a hedge should inflation run too hot, even if the Fed is raising rates.
The ICE U.S. Dollar Index which measures the greenback against six major rivals, traded flat at 89.76, giving up earlier strength as data Friday showed the University of Michigan’s consumer sentiment index in April fell to 97.8 from 101.4 in March. U.S. stocks, meanwhile, turned lower, but were on track for solid weekly gains.
Analysts said gold remained supported by the uncertainty swirling on several geopolitical fronts.
The White House plans fresh tariffs and threatens to block Chinese technology investments in the U.S., according to a report from The Wall Street Journal. Meanwhile, U.S. President Donald Trump has directed senior aides to look into the possibility of joining the Trans-Pacific Partnership, which could pose a further challenge to China.
As for tensions around Syria, the U.S. is working with allies on broad plans for unified military action against the country’s government, in response to a suspected Assad-led chemical-weapons attack on civilians. Earlier this week, Trump had hinted that an attack could be imminent, but has sounded a calmer note on the situation since then, saying the U.S. and its allies had to be careful not to draw Syria’s backers Russia and Iran into a wider conflict.
Trump may be distracted as an interview with former Federal Bureau of Investigation Director James Comey will air on ABC News on Sunday. Comey is expected to discuss his upcoming book, which reportedly includes an unflattering look at Trump’s presidency.
In other metals trading, May silver added 1% to $16.64 an ounce. It is headed for a roughly 1.7% weekly gain.
May copper rose 0.3% to $3.073 a pound, trading up 0.5% on the week. July platinum was nearly flat at $935.10 an ounce, poised for a weekly rise of 1.9%. June palladium traded at $980.05 an ounce, up 2.2% for the session and looking at a weekly rise of 9.5%.
Aluminum prices have gained more than 10% this week, driven higher as traders react to U.S. sanctions on Russia and its major aluminum producer.
In exchange-traded funds, the SPDR Gold Shares climbed 0.7%. The iShares Silver Trust rose 1.1%, while the VanEck Vectors Gold Miners added 2.1%.