Background on Key Figures and Context
On Friday, gold prices surged over 1% as the US dollar weakened, with market participants assessing President Donald Trump’s trade comments ahead of the weekend talks between Washington and Beijing. This development comes amid geopolitical tensions, including military exchanges between India and Pakistan.
Gold Performance
Spot gold advanced 1.1% to $1,340.29 per ounce on Friday, accumulating a weekly gain of 3.1%. The precious metal has seen an increase exceeding 27% since the beginning of the year, serving as a safe-haven asset against global political and economic uncertainty.
Meanwhile, US gold futures also rose 1.1% to $1,344.
Dollar’s Impact
The US dollar index fell 0.3%, making gold cheaper for holders of other currencies.
Trump’s Trade Comments
President Trump stated that an 80% tariff on Chinese products “sounds good” as his representatives prepared for talks aiming to prevent a trade war between the world’s two largest economies.
Geopolitical Tensions
In addition to the trade tensions, India and Pakistan accused each other of launching new military attacks using drones and artillery for the third consecutive day, marking the worst confrontation between the South Asian neighbors in nearly three decades.
Expert Opinions
David Meger from High Ridge Futures commented, “Clearly, the ongoing uncertainty surrounding tariffs remains the most significant underpinning for gold. We are not as bullish on gold as we were in recent months. We may be entering a period of consolidation or correction for some time.”
Other Precious Metals Performance
- Silver gained 0.8% to $15.75 per ounce.
- Platinum rose nearly 2% to $995.10 per ounce.
- Palladium advanced 0.2% to $977.68 per ounce.
Copper Prices Rise Ahead of US-China Trade Talks
Copper prices increased on Friday, supported by a weaker US dollar and tighter supply conditions. This was reflected in the premium of futures contracts over near-term ones, reaching a two-and-a-half-year high.
The benchmark copper contract for three months on the London Metal Exchange (LME) rose 0.3% to $9,456.50 per metric tonne.
Short-term Supply Constraints
In the short term, the US-China trade conflict and a copper investigation in the United States have reduced near-term availability of the red metal on the Shanghai Futures Exchange (SHFE) and within the LME system, drawing more copper into warehouses owned by Comex.
Natalie Scott-Gray, a metals analyst at StoneX, noted, “The overall strengthening of copper fundamentals is evident in the rise of near-term contract prices on both the LME and SHFE.”
This shortage is temporary and won’t offset the broader implications of a prolonged US-China trade war on global metal demand, which depends on economic growth.
Long-term Trade Tariff Risks
Trade tariffs pose long-term risks to global metal demand, influenced by economic growth. On the LME, the spread between spot copper and three-month copper contracts closed on Thursday with a premium of $49 per tonne, the highest since November 2022.
Other Industrial Metals Performance
- Aluminum on the LME decreased 0.1% to $2,410 per tonne.
- Zinc rose 1.4% to $2,656 per tonne.
- Lead added 1.9% to $1,989.50 per tonne.
- Nickel improved 1.9% to $15,815 per tonne.
- Tin remained stable at $31,880 per tonne.
