Gold ends higher for a 2nd session in a row on economic weakness and signs of U.S.-China tensions

Gold ends higher for a 2nd session in a row on economic weakness and signs of U.S.-China tensions

July silver shed 14.2 cents, or nearly 1%

Gold futures ended higher on Monday for a second session in a row, as prices found support from weakness in global stock markets amid fears of an escalation of tensions between the U.S. and China over the global outbreak of COVID-19.

“The potential for a trade war between the U.S. and China over the genesis of the virus could extend the duration of the global recession,” analysts at Zaner Metals wrote in a daily note Monday, adding that “it is not surprising to see global tensions flare.”

Still “seeing the U.S. and China engage in a full trade war again could eventually shake out as a big negative toward physical gold demand around the world,” the strategists said.

Gold for June delivery GCM20, -0.61% rose $12.40, or 0.7%, to settle at $1,713.30 an ounce after the yellow metal suffered a loss of about 2% last week, according to FactSet data based on the most-active contract. Prices settled higher on Friday, after posting losses for five straight sessions.

The metal has been trading in a range of $1,624.40 and $1,788.80 an ounce over the past 30-day period, FactSet data show. Higher trading for bullion have been underpinned by concerns about a global recession prompted by the viral outbreak, combined with unprecedented stimulus measures enacted by monetary-policy makers to limit the economic harm from the deadly pathogen.

“The safe-haven bet, buying gold, is back in demand,” with prices higher Monday, wrote Naeem Aslam, chief market analyst at AvaTrade, in a research note.

Meanwhile, a survey of global business activity from IHS Markit, highlighted the economic damage that has been wrought by efforts to halt the spread of the pandemic that has infected more than 3.5 million world-wide and claimed nearly 250,000 lives, according to data compiled by Johns Hopkins University. April saw the sharpest fall in economic output and other measures of activity on record for places regions from India to Asia and the U.S. showing similar contraction.

However, Peter Spina, president and chief executive officer at told MarketWatch that “fear of…strong unemployment and debt growth” feeds expectations that the deficit will grow by the “many trillions in 2020.” That will fuel more Western gold interest, he said.

“Gold is resting near $1,700, energizing for its next move to record [U.S. dollar] highs,” he said. “It is coming.”

Bullion has gained some altitude Monday as Secretary of State Mike Pompeo during a Sunday interview with ABC’s This Week, ”said he has seen ‘enormous evidence’ that the virus originated in a laboratory in Wuhan, China; and on a separate interview on Fox Business, President Donald Trump said that he believes China “made a horrible mistake and they didn’t want to admit it.”

U.S. stocks traded mostly lower in Monday dealings, providing additional appetite for precious metals.

“Given the fact that tensions have resurfaced between the U.S. and China, investors are likely to play safe and include gold in their portfolio,” Aslam wrote.

Meanwhile, July silver SIN20, 0.26% shed 14.2 cents, or nearly 1%, at $14.796 an ounce, following a weekly decline put in on Friday of 2% from the most-active contract settlement a week ago.

Elsewhere on Comex on Monday, July copper HGN20, 0.89% ended almost flat, up 0.02% at $2.3125 a pound, after the industrial metal fell 1.1% for the week based on the most-active contract prices. July platinum PLN20, 0.18% tacked on $4.60, or 0.6%, to finish at $778.50 an ounce, following a weekly gain of about 10 cents, but June palladium PAM20, +0.01% retreated $52.50, or 2.8%, at $1,835.30 an ounce after registering a weekly loss of 4.9% on Friday.

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