Gold prices inched up on Wednesday to their highest in a week as dollar weakened and equities dropped after President Donald Trump said he would push ahead with punitive tariffs on imports, rekindling fears of a potential trade war.
Spot gold rose 0.1 percent to $1,335.02 per ounce by 0314 GMT, having hit $1,340.42 an ounce earlier in the session, its highest since Feb. 26.
U.S. gold futures for April delivery rose 0.1 percent to $1,336.30 per ounce.
“Volatility in risk assets, and concerns around the implications of Trump’s tariff rhetoric has helped propel gold higher,” said Jordan Eliseo, chief economist at gold trader ABC Bullion.
Global stocks and the dollar fell after a key advocate for free trade and Trump’s top economic adviser, Gary Cohn, resigned after the president said he was sticking with plans to impose tariffs on imports, which some critics have dubbed the first shot in a global trade war.
Last Thursday, Trump had said a plan for tariffs of 25 percent on steel imports and 10 percent on aluminium products would be formally announced this week.
Traders fear the departure of Cohn, a former Wall Street banker, would embolden protectionist forces in the U.S. administration as Trump tries to impose hefty tariffs.
“Prices will remain firmly supported … from Cohn’s departure as the tariff gambit hits the market again with blunt force,” said Stephen Innes, APAC trading head at OANDA.
Cohn’s resignation also offsets pressure from recovering risk appetites that followed Tuesday’s news of North and South Korea holding their first summit in over a decade, and that came after the South said the North expressed willingness to discuss denuclearization with the United States.
Gold is used as an alternative investment during times of political and financial uncertainty, and a weaker dollar makes the metal cheaper for holders of other currencies.
Spot gold may fall to $1,327 per ounce following its failure to break above $1,342, according to Reuters technical analyst Wang Tao.
Meanwhile, Asian gold-backed exchange-traded funds (ETFs) added more tonnes in February than North America or Europe, reversing Asia’s 2017 trend of having more flows out, the World Gold Council said on Tuesday.
In other precious metals, silver fell 0.1 percent to $16.71 per ounce, after hitting its highest in more than two weeks.
Platinum dipped 0.2 percent to $966.50 per ounce. Palladium declined 0.4 percent to $982.00 per ounce.