Gold’s ‘good week’ gets better as trade war ignites haven demand

SINGAPORE, March 23 — Gold’s getting a double boost this week as investors piled into the traditional haven as a long-awaited trade war finally erupted between the US and China, extending gains that came after the Federal Reserve’s policy outlook proved less hawkish than feared.

Bullion for immediate delivery rallied as much as 0.8 per cent to US$1,339.16 (RM5249.51) an ounce, the highest since March 7, and was at US$1,338.39 at 1.05pm in Singapore. Gold’s up 1.8 per cent this week, heading for the biggest gain since the period to Feb 16. It surged 1.6 per cent on Wednesday after the Fed signalled the pace of tightening won’t accelerate this year.

Investor interest in bullion is regaining momentum as the trade fight stokes concerns global growth will slow, hurting risk assets including equities and industrial commodities such as steel.

Today, a few hours after President Donald Trump instructed Trade Representative Robert Lighthizer to impose levies on at least US$50 billion in Chinese imports, the Asian country’s Commerce Ministry announced plans for reciprocal tariffs.

“It’s been a good week for precious metal bulls, with multiple factors supporting the yellow metal,” said Jordan Eliseo, chief economist at Australian Bullion Co. “As it often does, gold rallied after the Fed pushed through with their anticipated rate hike, whilst the troubling rhetoric around tariffs, and the sharp sell off in risk assets, is also providing some safe-haven demand.”

The Bloomberg Dollar Spot Index fell 0.6 per cent this week, while equity markets in the US and Asia tumbled after the tariffs were announced. While there’d been concern among some investors the Fed may favour four hikes in 2018, the bank’s guidance signalled policy makers are still sticking at three.

There are other signs that gold is being favoured again. Holdings in exchange-traded funds backed by bullion have expanded to the highest level since 2013, while traders and analysts in a Bloomberg survey are the most bullish on the metal’s outlook in almost two months. — Bloomberg