London: Gold prices surged to a one-month high on Friday as the threat of a global trade war sent investors scrambling for safe assets.
US President Donald Trump signed a memorandum on Thursday that could impose tariffs on up to $60 billion of imports from China, prompting Beijing to urge the United States to “pull back from the brink”.
The tariffs have a 30-day consultation period, leaving room for compromise, but investors fear a trade war between the world’s two largest economies could develop with potentially dire consequences for global growth.
Global markets were further rattled by Trump’s appointment of John Bolton as National Security Advisor. Bolton has previously advocated using military force against North Korea and Iran.
World stock markets, the US dollar and US bond yields all fell.
“Risk aversion is currently the name of the game in financial markets,” said Peter Fertig, analyst at Quantitative Commodity Research. “Markets are looking for safe havens.”
Gold is traditionally seen as a safe place to park assets in times of uncertainty.
Dollar-denominated bullion is also helped by a weaker US currency and by lower bond yields, which make non-yielding gold more attractive.
Spot gold was up 1.3 per cent at $1,346.11 an ounce by 1259 GMT, having hit its highest since February 20 at $1,347.67.
US gold futures for April delivery gained 1.5 per cent to $1,347.20.
Gold prices had risen strongly this week after the US.
Federal Reserve gave guidance on the pace of interest rate rises that was less aggressive than some investors had expected.
Higher interest rates push up bond yields and tend to strengthen the dollar, so a slower pace of increases to interest rates is good for gold prices.
Gold was up 2.5 per cent on the week, the biggest weekly gain since September last year.
“The market is now looking once again to the key area of $1,360-$1,370, the maximum reached by gold in the past four years,” said ActivTrades analyst Carlo Alberto De Casa.
In other precious metals, silver rose 1.4 per cent to $16.60 an ounce, up 1.8 per cent this week.
Platinum gained 1.1 per cent to $957.70 and was set for a weekly gain of 1.5 per cent.
Platinum’s discount to gold on Friday hit its highest since Reuters data began in 1985. Platinum was $387 an ounce cheaper than gold, having traded at an average premium of $151 an ounce over the past 30 years.
Palladium firmed by 0.2 per cent to $981.90.