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Money News

Gold firms on economic woes, strained U.S.-China ties

(Reuters) - Gold firmed on Tuesday as investors sought a hedge against the economic fallout from the coronavirus pandemic and uncertainties stemming from tensions between Washington and Beijing and protests across the United States.

An employee takes granules of 99.99 percent pure gold at the Krastsvetmet non-ferrous metals plant, one of the world's largest producers in the precious metals industry, in the Siberian city of Krasnoyarsk, Russia November 22, 2018. REUTERS/Ilya Naymushin/Files

Spot gold was up 0.1% at $1,741.65 per ounce by 10:41 a.m. ET. U.S. gold futures rose 0.2% to $1,753.30.

“People know they need to be invested in the U.S. equity markets ... but they also need that gold exposure because there’s so much uncertainty,” said Michael Matousek, head trader at U.S. Global Investors.

But limiting gold’s gains, U.S. equities rose as optimism around reopening businesses overshadowed fears of Sino-U.S. trade tensions and protests in the country.

Two sources familiar with the matter said China told state-owned firms to halt large-scale U.S. soybean and pork purchases, with one of them saying state purchases of U.S. corn and cotton have also been put on hold.

“If you see emotions heating up between U.S. and China over Hong Kong - that’s going to change the trade dynamic with Hong Kong. More people will gravitate towards gold,” Matousek said.

Bullion, considered a safe store of value during political and financial uncertainty, got further support after U.S. President Donald Trump vowed to use the military to halt widespread protests in U.S. cities over the death of a black man in police custody.

Also helping gold, the U.S. dollar index earlier touched its weakest since mid-March.

Reflecting investor sentiment, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.5% to 1,128.40 tonnes on Monday, the highest in seven years.

Elsewhere, palladium rose 0.3% to $1,967.49 per ounce, while platinum fell 1.1% to $838.17. Silver was 0.4% lower at $18.19 per ounce.

Reporting by Asha Sistla in Bengaluru; Editing by Will Dunham

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