Gold futures posted the biggest weekly advance in almost two years, extending gains Friday and pushing up producer stocks, as mounting economic and geopolitical tensions fueled demand for the metal as a haven.
Bullion rose midweek as the Federal Reserve stuck with plans to raise rates only three times this year. It moved higher Friday as prospects of a trade fight between the U.S. and China stoked concern that global growth will slow. The ascent of John Bolton as U.S. President Donald Trump's national security adviser was seen adding to risks of a more muscular U.S. approach to some of the world's hot spots, further unsettling markets.
"The specter of a heated trade war between the U.S. and China has the marketplace spooked to end the trading week," Jim Wyckoff, senior analyst at Kitco Metals Inc. in Montreal, said in a report. Bolton's appointment "may also be causing some stress in the marketplace."
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Gold futures for June delivery climbed 1.7 per cent to settle at $1,355.70 an ounce at 1:30 p.m. on the Comex in New York. Kinross Gold Corp. and Yamana Gold Inc. led gains by large producers, which are having their best day in more than five weeks. The metal advanced 3.3 per cent this week, the most since April 2016.
Bullion, which surged last year by the most since 2010, had sputtered this year as the prospect of higher interest rates spurred investors to chase higher-yielding assets.
There are other signs that bullion is winning favor with investors again. Global holdings in exchange-traded funds have risen to the highest level since 2013, while traders and analysts in a Bloomberg survey are the most bullish on the metal's outlook in almost two months.
"It's been a good week for precious metal bulls, with multiple factors supporting the yellow metal," said Jordan Eliseo, chief economist at Australian Bullion Co. "Gold rallied after the Fed pushed through with their anticipated rate hike, whilst the troubling rhetoric around tariffs, and the sharp selloff in risk assets, is also providing some safe-haven demand."