Gold Climbs as Trump's Mexico Tariffs Shows 'No Country Is Safe'
(Kts/Dreamstime)
Friday, 31 May 2019 08:19 AM
Gold is finally seeing some bullish momentum as trade ructions escalate, fueling the biggest rally among the top miners in seven months.
President Donald Trump’s plan to impose a 5% tariff on all Mexican goods over illegal immigration rattled financial markets, boosting the haven appeal of the metal that has been weighed down by the strong dollar. China’s threat to blacklist foreign firms it accuses of damaging its interest also added to the global uncertainty that’s strengthening the case for owning bullion as a store of value.
Global equities are heading for the worst month since December and there are growing signals that an economic slowdown is imminent, with the outlook for China’s manufacturing sector deteriorating more than expected in May, according to data on Friday.
“The U.S. is demonstrating that they can weaponize trade on a whim,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “From China to Mexico, it sends a message that no country is safe. Gold is picking that up.”
Gold futures for August delivery climbed as much as 1.3% to $1,309.50 an ounce, the highest for a most-active contract since April 11. The precious metal is up 1.7% in May, poised to snap three months of losses. Silver also rose, trimming this month’s loss.