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Message: Gold Climbs After China Imposes Tariffs
By Amrith RamkumarApril 2, 2018 10:19 a.m. ET
Gold prices rose Monday after China imposed tariffs on a range of U.S. goods, following through on a promise to retaliate against the Trump administration’s penalties on imports of Chinese steel and aluminum.
Gold for June delivery added 0.8% to $1,337.40 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have stayed between about $1,305 and $1,360 this year, moving within that range based on safe-haven demand from investors, swings in the dollar and worries about higher interest rates.
Some money managers favor gold when they think markets might turn rocky. Protectionist trade policies from the U.S. and China have stoked fears of a global trade war that leads to higher manufacturing costs and eventually slower economic growth, pushing some traders to scoop up gold.
The Chinese penalties range from 25% on American pork and eight other kinds of goods to 15% on fruit and 120 types of commodities, according to the Chinese Finance Ministry.
“Last night’s tariff news from China spooked the market, took the dollar lower and gave us a lot of safe-haven buying in gold,” said Bob Haberkorn, senior market strategist at RJO Futures.
A weaker dollar boosts gold by making it and other dollar-denominated commodities cheaper for overseas buyers. The WSJ Dollar Index, which tracks the U.S. currency against a basket of 16 others, pared early losses and was recently up less than 0.1%.
Investors will be monitoring speeches from Federal Reserve officials and economic data this week for the latest clues about the path for higher interest rates. Gold struggles to compete with yield-bearing assets as borrowing costs rise, and the prospect of two or three more increases following March’s rate increase has limited price gains, according to analysts.
“Rates are going to hang over any gold rally we have for the remainder of the year,” Mr. Haberkorn said.
Among base metals, copper for May delivery added 0.7% to $3.0480 a pound. Prices fell 7.9% in the first quarter to end an eight-quarter winning streak, hurt by trade tensions and lukewarm Chinese economic data. However, data released over the weekend showed an official gauge of China’s factory activity rose to a three-month high in March, as factories ramped up production following the Lunar New Year holiday.
Some investors expect data to pick up as the year goes on and supply disruptions from mining labor contracts up for renegotiations to buoy prices.
Write to Amrith Ramkumar at [email protected]
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