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Gold futures climbed on Friday, putting gold prices on track for a monthly gain of around 3%, amid focus on U.S.-China tensions and global monetary stimulus measures.
President Donald Trump said that he planned to hold a Friday news conference on China but hasn’t set a specific time. His expected remarks would come after the U.S., Australia, Canada and the U.K. governments issued a joint statement Thursday reiterating their “deep concern regarding Beijing’s decision to impose a national security law on Hong Kong,” after China’s parliament, the National People’s Congress passed legislation Thursday that could greatly curtail democratic freedoms.
Fawad Razaqzada, market analyst at ThinkMarkets, said that “the rising U.S.-China rift, which has deepened over moves by Beijing to impose a security law on Hong Kong, has further boosted the appeal of the haven metal,” in a Friday research note.
August gold GCQ20, +1.31% GC00, +1.31% rose $21.60, or 1.3%, to $1,749.90 an ounce, after climbing a mere 0.1% on Thursday. Meanwhile, July silver SIN20, +2.57% picked up 40.3 cents, or 2.2%, to trade at $18.37 an ounce, retaking a psychologically significant level above $18.
For the month, gold was up by more than 3%. Silver was headed for a monthly gain of nearly 23%, which would be the best monthly performance since April 2011, according to Dow Jones Market Data.
“Silver’s rampage continued on a near uninterrupted basis throughout the month of May,” said Ryan Giannotto, director of Research at GraniteShares. “While silver is one of the more volatile metals, after a 20% monthly gain on the back of a 6% gain in April, trend exhaustion may be approaching.”
Meanwhile, “gold enjoyed one of its steadiest months of return in May,” Giannotto told MarketWatch. Even with the market optimism surrounding reopening, gold saw a gain, “underlying the precious metal’s all-weather investment characteristics.”
“Tensions surrounding Hong Kong’s autonomous status are in clear focus for gold’s next movements, with potential for not only a weakened dollar but also a heightened safe-haven demand,” he said. “This scenario would represent a two-fold gain for gold.”
In addition, Federal Reserve Chairman Jerome Powell is slated to participate remotely in an event at Princeton University at 11 a.m. Eastern, which will be watched by commodity investors for clues about monetary policy amid the COVID-19 pandemic.
The Fed’s balance sheet rose to $7.1 trillion as of Wednesday, up from $7.04 trillion last week, as the central bank continues to act to support financial markets during the public health crisis. A large chunk of that growth came from a $33 billion increase in the central bank’s emergency lending programs aimed at buying corporate bonds, which kept yields for government and corporate debt lower and had the effect of bolstering the appeal of gold, which doesn’t offer a coupon.
Traders also digested the latest batch of U.S. economic reports. Personal income rose 10.5% in April, helped by the government’s coronavirus relief payments, though consumer spending plunged. The May Chicago Purchasing Managers Index fell to 32.3 from 35.4 in April. The University of Michigan’s consumer confidence index rose to final reading of 72.3 in May, from a final April level of 71.8.
Among other Comex metals, July copper HGN20, +0.35% traded little changed at $2.4095 a pound but prices, based on the most-active contracts, were looking at a monthly rise of around 2.7%.
“Copper has continued its slow yet steady grind upwards as the industrial economy recovers from the nadir of the shutdown,” said Giannotto.
July platinum PLN20, +0.71% rose 0.2% to $870.20 an ounce, trading up 7% for the month. September palladium PAU20, -0.94% lost 0.9% to $1,928.30 an ounce, down a little over 1% for the month.
