Gold and Silver Jump Amid Heightened Trade Tensions

 

Gold and Silver Jump as U.S.-Chinese Trade Tensions Heat Up

(Bullion News Network) – The spot price of gold is set to begin the week solidly up after sliding last Friday. Gold gained over $90 per troy ounce today, recouping all of last week’s losses and inching closer to $3,400/ozt. Silver saw an even more dramatic start to the week, with the precious metal gaining over $1.80 per ounce in one of its largest daily jumps in months. The price action favored silver, driving the gold-silver ratio nearly 2.5 points lower to just over 97:1. Demand for safe haven assets spiked earlier today after more back-and-forth between the United States and China, whose precarious trade truce has been a major antagonist to American markets.

In a Truth Social post last week, U.S. President Donald Trump accused China of having “totally violated” the terms of the Geneva trade deal, a truce signed last month between the U.S. and China that significantly reduced tariffs on American and Chinese imports. Later that week, Treasury Secretary Scott Bessent told reporters that trade talks between the two countries were a bit stalled, largely due to China’s reluctance to ease restrictions on the export of rare earth materials. China responded in kind, accusing the United States earlier today of attempting to “undermine the existing consensus reached at the Geneva economic trade talks.” Bessent believes that Presidents Xi and Trump will meet soon enough to avoid further escalation in the ongoing trade dispute.

Investors seemed largely unphased by the latest back-and-forth between D.C. and Beijing. Despite the potential for further economic conflict between the world’s two largest economies, the Dow, S&P 500, and Nasdaq increased by 0.1%, 0.4%, and 0.7%, respectively, on Monday. CNN’s Fear and Greed Index suggests that markets are still largely motivated by greed, although market momentum remains firmly in “extreme fear” territory.” Safe haven demand, measured as the difference in 20-day returns between stocks and bonds, remains relatively low, ticking a bit lower today as Wall Street shrugged off the latest flare-up in China-U.S. tensions. 

Precious metals jumped on the uncertainty, however. Gold gained over $90 per troy ounce Monday after China issued a statement accusing the United States of attempting to sabotage the Geneva deal that paused reciprocal tariffs last month. Silver’s gains were even more pronounced, with the precious metal adding over $1.80 to its spot price and coming within striking distance of $35/ozt. 

Several notable data reports are due this week, beginning with an initial jobless claims report on Thursday. On Friday, the May U.S. employment report will go live, along with the unemployment rate, hourly wages, and consumer credit. These reports will shed more light on the U.S. economic situation, with a particular focus on the labor market. Employment data will likely play a crucial role in the Federal Reserve’s deliberations when it meets on June 18th to vote on whether to cut interest rates. CME FedWatch currently projects only a 4.7% probability that the FOMC will opt to ease rates, up from 3.8% yesterday but down from 5.6% last week and 34% one month ago. 

For now, both gold and silver will close the day up substantially compared to Friday. The gold-silver ratio is down on the week.