Gold Keeps Gains In Asian Trading Amid Trade War Fears
(Kitco News) - Gold prices were flat as Asian markets opened on Friday, but the yellow metal was able to retain most of last session’s gains triggered by trade war fears following U.S. President Donald Trump’s plans to impose hefty tariffs on imported steel and aluminum.
Trump said on Thursday that he plans to introduce tariffs of 25% on steel imports and 10% on aluminum next week. “We’re going to build our steel industry back and our aluminum industry back,” he said.
As markets digested Trump’s comments, Wall Street saw a selloff and the U.S. dollar index edged down to 90.20.
“U.S. equities were hammered overnight, with industrial stocks the hardest hit following Trump saying that he will impose tariffs on steel and aluminum,” said MKS PAMP Group trader Jason Cerisola.
April Comex gold futures were last at $1,317.70, up 0.96% on the day, after hitting a two-month low of $1,303.60 on Thursday. Spot gold on Kitco.com was flat, trading at $1,316.70, down 0.02% on the day.
“A volatile session for the precious [metals], with gold touching 2018 lows only to reverse higher late in the session,” Cerisola said. “Following Trump’s [announcement], the USD began to turn which saw large buying interest in gold seeing the market surge to a high north of 1320.”
The markets are worried about retaliation from China, Europe and Canada.
Canada is already looking into this option, with the country’s Foreign Affairs Minister, Chrystia Freeland releasing a very direct statement: “Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers.”
Analyzing the impact on Canada, CIBC World Markets said that if tariffs were implemented, it would be “a stiff blow” to Canada.
“The country is the largest supplier of both commodities to the U.S., and at least for now, there was no mention of any exemption for Canada. The lack of any exemption could reflect American concerns that China is dumping certain goods onto the U.S. market, using Canada as a back door, or simply the loss of the special status that the U.S. previously accorded its northern neighbor,” said CIBC economists Royce Mendes and Avery Shenfeld in a note published on Thursday.