Gold jumps 1% as Trump threatens new tariffs on China

New York (May 2) - Gold jumped more than 1% on Friday, shaking off initial losses, as risk sentiment soured on U.S.

President Donald Trump's threat to impose new tariffs on China, but bullion was still on track for its worst week since mid-March.

Spot gold rose 0.9% to $1,695.21 per ounce by 1:41 p.m. EDT (1741 GMT). U.S. gold futures settled 0.4% higher at $1,700.90.

"We saw some weakness in the U.S. equities markets ... It seemed Trump was hinting at a resurgence of the trade war," said Phil Streible, chief market strategist at Blue Line Futures in Chicago.

"That being said, a lot of investors liquidated various asset classes that might be affected by that and went back into safety, specifically gold."

Trump said on Thursday his trade deal with China was now of secondary importance to the coronavirus pandemic and he threatened new tariffs on Beijing, as his administration crafted retaliatory measures over the outbreak.            

    

Considered a safe store of value during economic or political turmoil, gold was, however, on track to post a more than 1% decline for the week as more economies eased restrictions and as investors covered losses in wider markets.

    South Africa took its first steps on Friday towards rolling

back one of the world's strictest COVID-19 lockdowns, a day

after UK Prime Minister Boris Johnson promised to set out a plan

next week on how Britain might start gradually returning to

normal life.                         

    "However, gold's narrative has not changed much. We're in

for a gloomy run of economic data over the next few months and

central banks will continue to ease, including the U.S. Federal

Reserve, which opens up gold to go higher," said Stephen Innes,

chief market strategist at financial services firm AxiCorp.

                        

    New data shows U.S. manufacturing activity plunged to an

11-year low in April as the novel coronavirus wreaked havoc on

supply chains, supporting analysts' views the economy was

sinking deeper into recession.             .

    Gold tends to benefit from widespread stimulus as it is

often seen as a hedge against inflation and currency debasement.

    Palladium slipped 3.3% to $1,895.19 per ounce, on

track for its fifth straight weekly decline.

    Platinum shed 1.5% to $760.59 per ounce and silver was down 1.1% at $14.86.

Reuters