Weekly Round-Up: Gold Price Hits 5-month High on Safe-haven Demand

The gold price reached a five-month peak after US President Donald Trump launched a missile strike on Syria.

gold price silver copper oil

Investors turned to safe-haven assets on Friday (April 7) after the US launched cruise missiles at a Syrian air base.

The gold price was on track for a fourth straight week of gains after climbing to $1,269.28 per ounce, its highest level since November 10, early in the day.

“The situation in Syria continues to deteriorate, with news of a U.S. missile strike,” Jordan Eliseo, chief economist at Australian Bullion, told Bloomberg in an email. “It’s no surprise for gold to catch an immediate safe-haven bid.”

Gold was also boosted by a report showing that the American economy added fewer jobs than economists expected in March.

“We saw a further move higher on the disappointing payrolls number,” said Brad Yates, head of trading for Elemetal, one of the biggest US gold refiners. “You’ve got people doing safe-haven seeking. Gold broke through its 200-day moving average. That has some shorts covering and potentially a new leg higher.”

Investors had already been on edge due to Trump’s meeting with Chinese leader Xi Jinping on Thursday. Talking points included North Korea and China’s huge trade surplus with the US.

As of 1:00 p.m. EST on Friday, the gold price was trading at $1,258.98.

Prices for other precious metals also rose in response to the US military action. Silver was trading at $18.22 per ounce as of 1:00 pm EST on Friday; meanwhile, platinum inched up 0.6 percent, to $963 per ounce, while palladium added 0.2 percent to reach $805.80 per ounce.

“Whether the market reaction is temporary or will continue will depend on the reactions from the international community,” Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui Trust Bank, said to Bloomberg. “We can’t see that at the moment so it’s hard to digest. Investors are probably preparing to escape to safe havens when the next news strikes.”

On the base metals side, copper slipped on Friday as investors moved out of riskier assets. Three-month copper on the London Metal Exchange closed down 0.4 percent, at $5,834 a tonne, ending the week barely changed.

Lastly, spot oil prices were on track to reach a one-month high on Friday on the back of concerns that the conflict in Syria could spread. Although Syria has limited oil production, its location and alliances with big oil producers in the region mean any escalation has the potential to increase supply-side fears.

Shortly after the missile strike was announced, Brent crude futures were up 15 cents, at $55.04 a barrel, after reaching an intraday peak of $56.08; that’s the highest since March 7. US West Texas Intermediate crude futures were up 22 cents, at $51.92, having reached an intraday high of $52.94.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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This article is updated each week. Please scroll to the top for the most recent information.

By Priscila Barrera, March 31, 2017

Gold prices were on track for an 8 percent quarterly rise on Friday (March 31), the biggest gain since the first quarter of 2016 when prices rose around 16 percent, according to ICE Benchmark Administration Limited.

“In the short term, factors including a strengthening dollar could pull prices down to around the $1,230 an ounce range,” said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo.

But uncertainty over US President Trump’s tax and investment plans and elections in Europe have supported the surge in prices, as investors turn to the precious metal as a safe haven asset.

“The fear trade has driven the market so far this year,” said David Govett at Marex Spectron.

Similarly, analysts at GFMS Thomson Reuters said that buying of gold as a haven from risk, plus a recovery in Indian buying, are likely to push prices to an average $1,259, up from $1,248 an ounce last year.

Prices will be supported even in the face of a persistent oversupply, “[a]s the year progresses … safe haven flows become increasingly likely, assisted by either U.S. or European politics or a combination thereof,” GFMS said.

As of 1.00 pm EST on Friday, the gold price was trading at $1,249.90 per ounce.

Looking over to silver, prices were set for a weekly gain of more than 2 percent. But silver headed lower on Friday, paring gains for the week, as stability returned to the US dollar. Analysts expect the precious metal prices to rebound in the coming days, supported by the dovish US fed interest rate outlook.

As of 1.00 pm EST on Friday, the white metal was trading at $18.23 per ounce.

Platinum rose 0.3 percent to $945.80 per ounce, after hitting its lowest in just over two weeks at $941 earlier in the session. The metal was also set to end the month about 7.6 percent lower, which would mark its worst monthly performance since August 2016. Palladium eased 0.2 percent to $792.43 an ounce and has risen over 16 percent this quarter.

On the base metals side, London copper slipped on Friday but was set to finish higher lifted by a curve in mine supply, while a ramp-up in China’s factory activity and fresh investor buys are expected to drive prices higher in the April quarter. London Metal Exchange copper was trading at around $5893 a tonne on Friday, and on track for a 6.5-percent gain for the first quarter.

Lastly, spot oil prices were on track to log a loss of around 7 percent for the first quarter, set to become the worst-performing asset of Q1, as traders questioned the sustainability of the OPEC-led production cut agreement and prospects for US output increase.

May WTI crude fell 20 cents, or 0.4 percent, to $50.15 a barrel on the New York Mercantile Exchange. May Brent oil on London’s ICE Futures exchange shed 27 cents, or 0.5 percent, to $52.69 a barrel, ahead of the contract’s expiration at the session’s end.

Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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