Gold tops one-month high as Middle East tensions spur safe-haven demand
Gold prices climbed on Friday to their highest point in more than a month, on track for a weekly gain, as investors sought safe-haven assets after Israel's strike on Iran heightened Middle East tensions.
Spot gold was up 1.3 per cent at $3,428.28 an ounce, as of 0134 GMT, after hitting its highest level since May 7 earlier in the session. Bullion has gained more than 3.5 per cent so far this week.
U.S. gold futures gained 1.4 per cent to $3,449.60.
Geopolitical tensions escalated after Israel struck Iran as tensions mounted over U.S. efforts to halt Iran's production of atomic bomb materials.
'This latest spike in hostilities in the Middle East has taken the focus off trade negotiations for now, with investors making a play towards safe-haven assets in response,' said Tim Waterer, chief market analyst at KCM Trade.
Israel declared a state of emergency, citing expected missile and drone attacks from Tehran, and the U.S. military is preparing for various contingencies in the Middle East, including potential assistance with evacuating American civilians, a U.S. official told Reuters on condition of anonymity.
'Gold surged past resistance around the $3400 on news of the airstrikes, and further upside could be in-store should the escalation continue,' Waterer said.
The new gold rush: Investors snap up bars and coins amid stock and bond market turmoil
Signaling a cooling U.S. labor market and subdued inflation pressures, the number of Americans filing new applications for unemployment benefits held at an eight-month high last week, while slowing domestic demand helped to restrain producer prices in May.
The data released a day after the Labor Department reported a moderate rise in consumer prices in May, bolstered expectations of an earlier rate cut.
Traders are now expecting a 55-basis-point rate cut by the year-end, starting in September rather than October as previously anticipated.
Elsewhere, spot silver edged down 0.1 per cent at $36.33 per ounce, platinum fell 0.8 per cent to $1,285.21, while palladium was steady at $1,055.21. All three metals were headed for weekly gain.
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That is part and parcel of the famously mercurial behaviour of Mr. Trump, who welcomes foreign leaders to the Oval Office for visits that can be love-ins or ambushes. 'Unlike normal times you're preparing for unpredictability,' Mr. Travers said. 'Everyone's aware that things might emerge at this summit. The United States might put new things on the table.' There are ways to smooth things, Mr. Boehm said. In Charlevoix, Mr. Trudeau followed the tradition of asking the U.S. president to open a discussion on the economy by talking about his 2018 tax cuts, and he warmed to the talk. But his interest waned in long talks with many speakers. Mr. Trump didn't care for talk about the rules-based international order. This year, Mr. Carney's team has trimmed the agenda into narrow topics. Instead of butting heads on climate change, for example, leaders will talk about combatting wildfires. Sherpas are expecting to agree on specific 'outcome' statements, not a broad final communiqué. Tariffs aren't officially on the agenda, though they will be on every leader's mind. Mr. Carney has invited Mexican President Claudia Sheinbaum, so there will certainly be discussions about North American trade on the sidelines. Defence spending is more a topic for the NATO summit a week later, but will certainly come up, too. 'There is a distinction between collective outcomes and what's discussed at the table. And both matter,' Mr. Travers said. 'In the G7 they have real conversations around the table as peers. It's a huge opportunity to speak to and influence the President.' There are scheduled discussions on global security, which will now almost certainly be dominated by Israel's strikes on Iran and the fear the conflict will escalate to full-scale war. One specific topic on the formal agenda – Ukraine – has the potential to spark disagreement. Ukrainian President Volodymyr Zelensky is invited, but there has been a split between Mr. Carney and European leaders, staunch backers of Ukraine, and Mr. Trump, who has pushed Ukraine to make concessions to Russia to end the war and has threatened to slash military support. A disagreement, a failure to find some bridge between them, could lead to a rift that flows into the NATO summit the following week. 'This is probably the nightmare for everybody that is preparing for the summit,' Mr. Whitman said. For Mr. Carney, that could be a nightmare scenario, too. A bigger rift between the U.S. and the rest of the G7 could leave Canada in the middle, and more alone. Mr. Carney's foreign policy hedging rests on building stronger ties with other countries. Mr. Carney has an interest in ensuring that Europeans don't apply their own hedging strategy by turning inward to each other in a way that leaves out Canada. He also doesn't want a confrontation within the G7 to leak into his so-far warm relations with Mr. Trump, possibly scuttling his trade and security talks with Mr. Trump. He certainly remembers that the 2018 Charlevoix summit marked the break in Mr. Trump's personal relationship with Mr. Trudeau. Underlying those summit risks is the broader unpredictability in the group of democratic nations – the G7, the EU, and others such as South Korea and Australia – that now question what kind of ally and partner the U.S. is becoming. And how fast the change will be upon them. The U.S. retreat, motivated in part by its high debt and competition with China, started before Mr. Trump and could endure after. Certainly, Mr. Carney appears to be working on the assumption that it is a lasting paradigm shift. That means a different kind of foreign policy. Canadians aren't used to the calls for sacrifice to pay for the military that Mr. Carney made in his recent speech. 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But the potential future sacrifices haven't yet been counted. 'Do you support more defence spending if you are going to get less health care, you're going to get less housing, less transfers to the provinces?' Mr. Rigby said. 'That's a slightly different question.' For now, such questions haven't slowed the sudden change in Canada's foreign policy. Mr. Trump's tariffs, his threats, the 51st state talk – all jolted Canadians to see that a more risky world is now here. And their country is more alone. Mr. Carney has embraced a harder-nosed approach to a world facing an unpredictable interregnum.
