Gold is closing out the year with a flourish. Prices were poised for the biggest monthly gain in almost two years as concerns about next year’s economic outlook, volatility in global equities and a government shutdown in the US spur demand for the metal as a haven.
Spot bullion hit a six-month high on Friday, topping US$1,280 an ounce, as investors favored defensive assets, adding to holdings in exchange-traded funds over the month.
Silver rose to the highest since August as it approached its 200-day moving average, which could trigger further technical buying.
Gold is powering into the year’s end as global equities sink in the fourth quarter.
Banks, including Goldman Sachs Group Inc, have flagged the potential for gains over 12 months as the US Federal Reserve steps back on the pace of US rate increases.
As the final week of the year closes, there was a slew of downbeat economic data and outlooks from the US, China, Japan and Europe.
“We are very optimistic on gold,” said Benjamin Lu, an analyst at Phillip Futures Ltd. “There’s still a lot of uncertainty and gloom toward 2019.” Macro concerns, the UK’s Brexit process and high levels of borrowing are among risks that would aid bullion in the first quarter, Lu said.
The metal will probably stay volatile next year, according to Richard Fu, head of Asia and Pacific at Amalgamated Metal Trading Ltd in London.
The metal might trade in a US$1,150 to US$1,375-an-ounce range as bullish and bearish drivers compete, he said.
Spot gold advanced as much as 0.5 percent to US$1,282.23 an ounce on Friday, according to Bloomberg generic pricing.
It is up 4.8 percent for the month, on pace for biggest monthly rally since January last year.
At the Comex, bullion for delivery in February rose 0.1 percent to settle at US$1,283 an ounce.
The US’ trade spat with China and a late-blooming bumper crop in the US are combining to curb the amount of fresh table grapes imported from Chile when the weather turns cold.
That is forcing the South American country to look to Asia to sell off its fruit in the latest example of an unexpected market getting caught up in the US-China spat.
California grapes get harvested into the fall, but in December — as those supplies dissipate — the US turns to Chile for fresh fruit.
This year, though, with plenty of leftover domestic inventory, there are signs that US demand for grape imports is set to decline.
The result: Chile, the world’s biggest exporter of table grapes, fresh blueberries, plums and cherries, is being forced to seek out alternative destinations.
“We’re dealing with the situation by looking for new markets, specifically Southeast Asia,” Chile Fruit Exporters Association chairman Ronald Bown said in an interview in Santiago.
In California, the main source for grapes in the US, there is also a late harvest that has begun to compete with southern-hemisphere farms.
Chile is also dealing with headaches in the nut trade.
India raised tariffs on walnut purchases from 30 percent to 100 percent, a response to US President Donald Trump’s decision to target global shipments of steel and aluminum.
India applied the retaliatory levy across the board, not just on US walnuts.
Containers of Chilean walnuts sailing for India were rerouted in May as clients sought to circumvent the tariffs by shipping to other countries, Nicolas Di Cosmo, president of industry association Chilenut, said by telephone.
“Crises normally create opportunities,” Di Cosmo said. “But the trade war is affecting the healthy flow of goods to such an extent that it’s nullifying any type of opportunity there could be.”
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