Gold prices traded higher on Monday as a revival of trade tensions between the U.S. and China cast a chill over risk assets, forcing a second straight-day of losses in equities.
By 11:35 AM ET (1535 GMT), gold futures for delivery on the Comex exchange were up 0.7% at $1,725.20 an ounce, albeit without any sign of retesting the highs of the last month.
Spot gold was up 0.3% at $1,706.18 an ounce.
Silver futures were more affected by the declines in risk assets, but bounced off support around the $14.80 level to trade at $14.88 an ounce, still down 0.4% from Friday’s close. Platinum futures were up 0.5% at $777.75 an ounce.
The moves happened largely in response to remarks over the weekend from President Donald Trump, who told Fox News that sanctions could be “the ultimate punishment” for its role in the spread of the coronavirus. He also threatened to rip up the Phase 1 trade deal of last year if China fails to buy the promised volumes of U.S. goods.
Other haven assets remained well bid, with Treasury yields flat near recent lows and ultra-safe German 10-year yields hitting their lowest in over six weeks before rebounding to -0.56%, up two basis points on the day.
Eurozone sovereign debt has traded choppily ahead of a ruling on Tuesday by the German Constitutional Court on the legality of the European Central Bank’s asset purchase programs. While most analysts expect the court to accept the European Court of Justice’s ruling in 2018 that the purchases are allowable, some analysts have noted that the ECB’s drastic expansion of QE has raised the risk that it will be more confrontational, maybe even forcing the Deutsche Bundesbank to pull out of a program that is a key part of Europe’s pandemic policy response.
Elsewhere on a thin day for economic data, eurozone purchasing manager indices were revised slightly lower but added nothing to the shock value of the preliminary readings. U.S. factory goods orders, down just over 10% in March, also failed to shock a market that is more focused on U.S. labor market data toward the end of the week.