Gold climbed back above $2,000 an ounce as the dollar weakened and renewed tensions between the U.S. and China boosted demand for haven assets.
The Trump administration announced further curbs on Huawei Technologies Co. aimed at cutting its access to commercially available chips. The move is the latest tit for tat in escalating tensions between Washington and Beijing over everything from the pandemic to China’s tight grip over Hong Kong. Equities drifted, while a dollar gauge slid to the lowest since 2018.
Gold has surged this year on rising haven demand and as investors bet central banks and governments will maintain support for economies hit by the coronavirus. Bullion hit an all-time high on Aug. 7, before posting its first weekly drop in more than two months, buffeted by an uptick in real yields.
“Gold has already had to price in trade worries, but some of the more recent escalating issues bubbling between the U.S. and China are just beginning to be priced in,” Christopher Louney, a commodity strategist at RBC Capital Markets LLC, said in an emailed message. “This is part of the reason why we think politics and geopolitics together are the real under-appreciated upside risks for gold in the coming quarters.”
Bullion has gained more than 30% this year, aided by massive stimulus measures from central banks and governments trying to help economies to recover from the pandemic. The recent pressure on the dollar, worries over new Covid-19 hot spots and geopolitical uncertainty add to gold’s appeal.
Gold for immediate delivery headed for a fourth gain in five sessions, rising 0.8% to $2,001.50 an ounce at 12:06 p.m. in New York. December futures advanced 0.6% on the Comex.
Spot gold pared earlier gains of as much as 1.5% as dollar losses eased.
“Gold has been up sharply over the last few days following that big selloff last Tuesday,” Fawad Razaqzada, a market analyst at ThinkMarkets in London, said by phone. “It reached that $2,015 level, so that level has turned into a bit of resistance — people taking profits from that level in case it stops going higher again.”
Spot silver gained 1.2% to $27.8137. The Bloomberg Dollar Spot Index fell 0.3%.
Minutes from the Federal Reserve’s July meeting will be issued on Wednesday and may yield clues on its next steps.
“We’re getting back in the saddle,” Stephen Innes, chief market strategist at AxiCorp Ltd., said in a note. “After plunging 10%, washing out leveraged players and retail buyers who arrived late to the party, gold has made an enduring comeback.”
— With assistance by Ranjeetha Pakiam