Gold struggles to gain amid global trade tensions, but clings to weekly advance

Gold futures saw muted early action on Friday as the dollar showed signs of strengthening, however a broad-based decline in global equities on intensifying global trade disputes were limiting losses for bullion.

August gold  edged down by 60 cents, or less than 0.1%, at $1,302.80 an ounce, pulling back from its highest finish for a most-active contract since May 31 on Thursday. Still, the metal was holding on to a slight weekly advance of about 0.3% as futures for the Dow Jones Industrial Average and the S&P 500 index  were trading firmly lower amid rising global trade disputes, flaring up during continuing meetings of Group of Seven nations in Quebec.

The ICE U.S. Dollar Index a measure of the dollar against a half-dozen major currencies, traded 0.4% higher. For the week, the dollar gauge was down 0.2%, retreating from a healthy month for the buck, which still has it up about 0.7% over the past 30 days, according to FactSet data.

Against that backdrop, metals traders were contending with a stronger dollar, which tends to weigh on commodities priced in the currency, like gold, against heightened political friction, a bullish factor for the precious metal because it supports the perception of bullion as a haven asset.

President Donald Trump is locked in a feud between the U.S. and its North American allies Canada and Mexico as well as those with Europe and China, with French President Emmanuel Macron describing protectionist policies emanating from Trump. as “hegemony,” and advocating for the U.S. being eliminated from the G-7.

“The six countries of the G-7 without the United States are a bigger market taken together than the American market. There will be no world hegemony if we know how to organize ourselves. And we don’t want there to be one,” French President Emmanuel Macron told a news conference flanked by Canadian Prime Minister Justin Trudeau in Ottawa on Thursday.

“Gold is just tracking the U.S. dollar. Technically Comex gold August faces key resistance at $1312.60. Only a break of $1312.60 will trigger another wave of rise,” Chintan Karnani, chief market analyst at Insignia Consultants told MarketWatch. Karnani said that despite the rhetoric from Macron, he expected cooler heads to prevail as discussion between the nations continue. “Trump will soon tone down his approach towards European Union. There is position squaring and rebuilding before a big next week,” he said.

“As long as gold does not break $1312.60, it will consolidate in $1290.60-$1299-$1312.20 range,” he said.

Meanwhile, July silver  lost 7 cents, or 0.4%, to $16.745 an ounce, with a sharply weekly rise of 1.9% in sight as gold’s sister commodity outperforms its rival.