Gold Climbs as Trump's Mexico Tariffs Shows ‘No Country Is Safe’

Gold is finally seeing some bullish momentum as trade ructions escalate, fueling the biggest rally among the top miners in seven months.

President Donald Trump’s plan to impose a 5% tariff on all Mexican goods over illegal immigration rattled financial markets, boosting the haven appeal of the metal that has been weighed down by the strong dollar. China’s threat to blacklist foreign firms it accuses of damaging its interests also added to the global uncertainty that’s strengthening the case for owning bullion as a store of value.

Global equities headed for the worst month since December and there are growing signals that an economic slowdown is imminent, with the outlook for China’s manufacturing sector deteriorating more than expected in May, according to data on Friday.

“The U.S. is demonstrating that they can weaponize trade on a whim,” said Howie Lee, an economist at Oversea-Chinese Banking Corp. “From China to Mexico, it sends a message that no country is safe. Gold is picking that up.”

Gold futures for August delivery climbed to 1.4% to US$1,311.10 an ounce, the highest for a most-active contract since April 10. The precious metal rose 2% in May, snapping a three-month losing streak. Silver also rose, trimming this month’s loss.

A gauge of the biggest gold producers tracked by Bloomberg Intelligence headed for its steepest gain since Oct. 18. Barrick Gold Corp. was among the biggest winners, with shares climbing 5.5%. Newmont Goldcorp Corp.advanced 3.5%.

“The market is kind of risk-off but the volatility index is up, so people are just buying gold again,” Sergey Raevskiy, an analyst at SP Angel, said in a telephone interview. “People are thinking that this trade war between China and the U.S. may be more protracted than we initially thought.”

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