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Gold ends higher as Trump comments put pressure on the dollar

Gold ends higher as Trump comments put pressure on the dollar

Mon Apr 16 2018


Gold prices ended higher Monday, as President Donald Trump’s claim on Twitter that Russia and China are playing a “currency devaluation game” contributed to pressure on the dollar, lifting demand for the precious metal, which is traded in the greenback.


Palladium futures, meanwhile, marked their highest finish since late February, buoyed by worries about the potential for further U.S. sanctions on Russia, which is among the world’s biggest producers of the metal.


Trump’s “remarks on China and Russia playing the devaluation game and it not being acceptable,” contributed to gold’s gains Monday, said Michael Kosares, founder of gold broker USAGOLD. The comments resurrect “concerns from late January when Treasury Secretary [Steven] Mnuchin seemed to reverse the traditional strong dollar policy at the Davos conference.”


“The president seems to be inferring that devaluation will beget devaluation,” said Kosares. “That’s why the dollar took a tumble and gold pushed higher.”


June gold GCM8, +0.03% tacked on $2.80, or 0.2%, to settle at $1,350.70 an ounce. It tallied a rise of roughly 0.8% last week, after ending Wednesday at the highest finish since late January. May silver SIK8, +0.26% climbed 0.1% to $16.677 an ounce.


The ICE U.S. Dollar Index DXY, -0.14% which measures the greenback against six major rivals, fell 0.4% to 89.44.


A rise in U.S. stocks Monday, which enjoyed a relief rally pinned on hopes the U.S. may not be dragged into a deeper conflict with Syrian allies Russia and Iran, had put pressure on gold in early dealings.


Gold’s moves also follow a round of mixed economic data, though those reports were seen doing little on their own to dissuade the Federal Reserve from modest, gold-negative interest-rate hikes over coming months.


Markets have also tempered their reaction to news the U.S. joined with allies France and Britain to launch missiles over the weekend that destroyed much of Syria’s chemical-weapons capabilities. The strikes left much of President Bashar al-Assad’s conventional military facilities intact, easing immediate fears of an escalation in tensions with Russia, a backer of Syria’s regime. On Sunday, Assad’s forces unleashed fresh airstrikes against rebels in a demonstration of his regime’s continued strength.


Still, Russian stocks and related exchange-traded funds were under some pressure after reports the Trump administration will target the country with more sanctions, this time based on companies linked to the Assad regime and chemical weapons.


Gold is “reacting hardly at all to the U.S.-led military strike against Syria which, according to U.K. Foreign Secretary Boris Johnson, was a one-off action, with no further attacks planned,” said Carsten Fritsch, commodities analyst at Commerzbank.


Haven demand for gold may be showing up in exchange-traded fund flows, however, Fritsch said. Gold ETFs registered inflows of 16.6 tons last week and of no less than 36 tons since the beginning of the month, the Commerzbank team noted. This is already nearly twice as much as in all of March. By contrast, speculative financial investors left their net long positions more or less unchanged in latest week. “Investors are slowly beginning to show increased buying interest in response to the geopolitical risks and resulting uncertainty,” Fritsch said.


The SPDR Gold Shares GLD, +0.14% and the iShares Silver Trust SLV, +0.26%  each rose 0.3%, while the VanEck Vectors Gold Miners GDX, -0.39%  fell 0.8%.


In other metals trading, palladium jumped in reaction to the Syrian airstrikes, but there is also a “large worry that Norilsk Nickel—the world’s top producer of the metal—could be hugely affected by the latest round of sanctions slapped on Russia,” said Adam Koos, president of Libertas Wealth Management.


June palladium PAM8, -0.38%  rose 2.3% to finish at $1,003.75 an ounce—the highest settlement since Feb. 28.


Copper HGK8, -0.08% rose 0.8% to $3.096 a pound, but July platinum PLN8, +0.42% shed 0.1% to $931.80 an ounce.


Source: https://www.marketwatch.com/