Gold slips after hitting one-week high on concerns about trade war
NEW YORK/LONDON — Gold prices slipped on Wednesday after hitting a oneweek high on news that a top economic advisor to the Trump administration had resigned, stoking fears of a trade war and knocking down the dollar.
Market watchers said the departure of economic adviser Gary Cohn, a former Wall Street banker, would embolden protectionist forces in the US administration as President Donald Trump tries to impose hefty tariffs on steel and aluminum.
The US dollar and global stock markets initially sagged on the Cohn departure. The greenback recovered in US trading against a basket of major currencies, while Wall Street shares pared initial losses, as doubts persisted over whether the proposed tariffs would be enacted.
Spot gold dropped 0.60% at $1,325.51 per ounce by 1:34 p.m. EST (1834 GMT), after touching $1,340.42, its highest since Feb. 26. US gold futures for April delivery settled down $7.60 or 0.60% at $1,327.60 per ounce.
“It’s a little profit taking from hitting highs yesterday. The mode today is risk-off for everything, not just commodities, equities, even cryptocurrencies are down,” said Michael Matousek, US Global Investors trader.
“It became a risk-off mode because people are unsure of the direction the government is going to take about a lot of things.”
While a possible trade war could be positive for gold, South Korea agreeing to denuclearization talks could pressure gold, traders said, keeping gold in a tight trading range. Mr. Trump said on Tuesday he saw “possible progress” regarding North Korea after South Korea said Pyongyang is willing to talk with the US on denuclearization and will suspend nuclear tests while discussions are under way.
Gold is used as an alternative investment in times of political and financial uncertainty.
A weaker dollar makes the metal cheaper for holders of other currencies.
Support for gold could be found below $ 1,300 per ounce, said Rob Haworth, senior investment strategist for US Bank Wealth Management. Meanwhile, silver fell 1.4% at $16.49 per ounce, after hitting its highest in more than two weeks on Tuesday. “Silver increased (on Tuesday) almost twice as sharply as gold, pushing the gold/silver ratio slightly below 80 again. In historical terms silver is still far too cheap, however — and in our opinion unjustifiably so,” said Commerzbank in a note.
Platinum fell 1.7% at $ 952.70 per ounce, earlier dipping to $945.70, a twomonth low. Palladium declined 2% at $ 966.40, having hit $ 961.55, its lowest since Feb. 9.