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Gold prices gave up earlier losses to move higher on Monday, getting a lift as nationwide protests following the death of a black man in Minneapolis police custody raised uncertainty in the financial markets and the potential for further spread of COVID-19.
Investors eyed the latest developments tied to U.S.-China tensions over Hong Kong.
“Widespread protests across the U.S. add to the concern a second wave of coronavirus could hit major U.S. cities,” said Edward Moya, senior market analyst at Oanda.
Civil unrest erupted across major cities from Los Angeles to New York as anger over the death in police custody of George Floyd last Monday sparked demonstrations. A Minneapolis police officer, Derek Chauvin, was captured on video driving his knee onto Floyd’s neck until the handcuffed man lost consciousness and later died.
Meanwhile, trade frictions between the world’s two largest economies will also “start to put a dent in the global economic recovery trade and that should provide gold with further support,” Moya said in a Monday note.
Gold for August delivery GCQ20, +0.04% on Comex rose $1.30, or 0.07%, to $1,753 an ounce.
“Certainly there is the prospect for a surge in safe haven buying [for gold] in the event that U.S./Chinese trade relations escalate into a trade war like condition,” analysts at Zaner Metals wrote in a Monday report.
“However, seeing the potential for headwinds against the global recovery could be a double-edged sword for precious metals,” they said. “Nonetheless, the precious metals markets have continued to garner a lot of coverage in the financial press and that in of itself is fostering investment interest.”
Bloomberg News reported Monday that China was poised to halt purchases of some U.S. farm imports, including soybeans. That follows the U.S. State Department’s determination that Hong Kong no longer was autonomous from China and President Donald Trump’s move toward ending the U.S.’s special trade relationship with Hong Kong.
Also Monday, a weaker tone for the U.S. dollar was seen underpinning precious metals. The ICE U.S. Dollar Index DXY, -0.43%, a gauge of the currency against a basket of six major rivals, was down 0.4%.
Gold prices briefly extended earlier declines as U.S. economic data Monday showed signs of an improvement in the economy.
The Institute for Supply Management said its manufacturing index climbed to 43.1% last month from an 11-year low of 41.5% in April, while the Commerce Department reported that spending for U.S. construction projects dropped a smaller than expected 2.9% in April.
Meanwhile, July silver SIN20, +1.62% was up 31.6 cents, or 1.7%, at $18.815 an ounce on Monday.
Silver futures on Friday posted a gain of nearly 24% for the month, the largest since 2011, with the industrial metal finding support as global economies continue to reopen from pandemic-related shutdowns.
Rounding out metals action on Comex, July copper HGN20, +1.81% traded at $2.472 a pound, up 1.9%. July platinum PLN20, +3.03% rose 3.3% to $903.60 an ounce and September PAU20, +0.41% tacked on 0.8% to $1,989 an ounce.
Read:Palladium shows signs of life after the pandemic halted its record rally, but a bargain it is not
William Watts contributed to this report.
