Background on Key Figures and Institutions
Donald Trump, the President of the United States, has been making headlines with his threats of new tariffs on the European Union. This uncertainty has led investors to seek safe-haven assets, such as gold.
Moody’s, a global financial services firm, recently downgraded the credit rating of the United States due to concerns over its growing $36 trillion debt pile. This has further increased the appeal of gold as a safe-haven asset amid geopolitical and economic uncertainties.
Gold’s Surge in Value
On Friday, gold saw a 2% increase, marking its best weekly performance in six weeks. Spot gold rose 2% to $1,359.96 per ounce, while COMEX gold futures climbed 2% to $1,360.10 per ounce, gaining 4.82% for the week.
The weakening US dollar, which fell 0.7%, made gold more affordable for holders of foreign currency, further boosting its appeal.
Silver, Platinum, and Other Metals Performance
Silver for immediate delivery increased 0.8% to $33.33, while platinum fell 1.5% to $999.29. Both metals reported weekly gains.
Platinum saw a 1.2% rise to $1,094.25 at early trading hours.
Copper Reaches Three-Week High
Copper prices hit a three-week high on Friday, driven by the weak US dollar and concerns over issues at a major mine in the Democratic Republic of Congo.
COMEX copper futures rose 3% to $4.82 per pound, their highest level since April 30. The benchmark three-month copper contract on the London Metal Exchange (LME) gained 1.2% to $9,617 per tonne, its highest since May 14. Copper prices increased by 5.28% for the week.
Impact of Trump’s Tariff Threats
Although Trump threatened a 50% tariff on EU products, metals’ gains moderated briefly before recovering as the US dollar index fell to a three-week low. A weaker dollar makes metals priced in US dollars more attractive to buyers using other currencies.
Copper’s rise was also fueled by concerns over the Kamoa-Kakula copper mine in the Democratic Republic of Congo, which is Africa’s largest copper producer and one of the world’s biggest.
Performance of Other Base Metals
Aluminum on the LME advanced 0.4% to $2,466.5 per tonne; zinc added 0.3% to $2,705; nickel gained 0.7% to $15,605; lead improved 1.1% to $1,991; and tin rose 1.6% to $32,910.
Key Questions and Answers
- Q: Who is Donald Trump and why is he relevant in this context? A: Donald Trump is the President of the United States. His threats of new tariffs on the European Union have caused market uncertainty, prompting investors to seek safe-haven assets like gold.
- Q: What is the significance of Moody’s downgrading the US credit rating? A: Moody’s downgraded the US credit rating due to concerns over its growing $36 trillion debt, increasing the appeal of gold as a safe-haven asset.
- Q: How did the weakening US dollar affect gold prices? A: A weaker US dollar made gold more affordable for holders of foreign currency, boosting its appeal and leading to a 2% increase in gold prices.
- Q: What factors drove copper prices to a three-week high? A: Copper prices reached a three-week high due to the weak US dollar and concerns over issues at a major mine in the Democratic Republic of Congo.
