May 13, 2019 11:20 a.m. ET
by MYRA P. SAEFONG
MARKETS/COMMODITIES REPORTER
&
RACHEL KONING BEALS
Gold futures climbed Monday, overcoming earlier losses, as U.S. benchmark stock indexes suffered steep declines with U.S.-China trade talks at an apparent stalemate.
“Uncertainty over the real impact on [the] U.S. economy and Chinese economy is driving gold prices higher,” Chintan Karnani, chief market analyst at Insignia Consultants, told MarketWatch.
“Traders and investors were neutral in gold on the weekend on the belief that a trade deal between U.S.-China would be reached. China announcing counter tariff[s] acted as fodder [for a] gold price rise,” he said. “But spot gold needs to trade over $1,300 till tomorrow to attract new investors and new traders alike.”
Gold for June delivery GCM9, +1.12% was up $10.80, or 0.8%, at $1,298.20 an ounce, but had traded as low as $1,282.40. It settled Friday at $1,287.40, a move that marked the fifth gain in six sessions, according to FactSet data. For last week, prices based on the most-active contract climbed 0.5%.
The SPDR Gold Shares ETF GLD, +1.12% rose 1%.
Gold futures had settled higher for a second straight session on Friday as the Trump administration raised the import taxes on select Chinese goods from 10% to 25%. The administration claimed its Chinese counterparts reneged on commitments made in earlier talks.
Stocks on Friday had dropped initially on the trade developments before staging a late-session recovery and in Monday dealings, U.S. stocks traded sharply lowerafter China said it will raise tariffs on roughly $60 billion worth of U.S. imports to as high as 25%.
The dollar, as measured by the ICE U.S. Dollar Index DXY, -0.03% was down 0.1%. Currency investors were increasingly favoring safe havens, including the Japanese yen, over the dollar.
“Markets will likely be left in limbo for the coming weeks. Positive risk sentiment that had built in the early months of 2019 is now questionable,” said Richard Perry, market analyst at Hantec Markets. “Safe havens have benefitted from all of this. Treasury yields have fallen, whilst the yen and Swissy have been the main winners in the forex space. The dollar had initially slipped on the shock, however, in the past couple of sessions has begun to build support again.”
It is relative dollar strength that has limited gold’s advance, say analysts, as a richer buck makes the metal less attractive to investors using other currencies and vice versa.
redacted from Market Watch article 5-13-19
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