Gold climbs as Trump move on Mexico shows 'no country is safe'

Singapore (May 31) Gold is finally seeing some bullish momentum as trade war ructions escalate. President Donald Trump’s tariff salvo trained at Mexico boosted the metal, which has been weighed down by the strong dollar.

Bullion prices advanced to a two-week high to head for a narrow monthly gain after Trump said that he would impose a 5% tariff on Mexican goods, effective June 10, until that country stops immigrants from entering the US illegally.

“The US is demonstrating that they can weaponize trade on a whim,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “From China to Mexico, it sends a message that no country is safe. Gold is picking that up.”

Gold has been struggling to make headway this year even as global tensions picked up, losing out as investors preferred the haven of US Treasuries, with yields on 10-year notes at 20-month lows, and the greenback. Global equities are heading for the worst month since December and there are growing signals that an economic slowdown is imminent, with the outlook for China’s manufacturing sector deteriorating more than expected in May, according to data on Friday. The move against Mexico adds another layer of risk.

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