Metals prices received a battering on Friday after fresh reports of more China tariffs spooked investors and sent the U.S. dollar higher.
Gold and copper both opened higher on Friday but ended in the red after Bloomberg reported that President Trump had instructed aides to push ahead with tariffs on around $200 billion of Chinese products.
Both metals had been creeping higher earlier in the week on hopes that fresh talks between the U.S. and China could help resolve the trade dispute.
The price of gold for September delivery fell 0.58% to $1,195 a troy ounce on the Comex division of the New York Mercantile Exchange on Friday, unwinding some of its gains from earlier in the week.
Copper for September delivery was also down, falling 1.39% to $2.40 a pound on the Comex division.
The rise in the U.S. dollar has weighed on the gold price in recent months, but weakness in the currency earlier in the week had helped gold make up lost ground. That recovery was wiped out on Friday as the dollar climbed higher on the latest tariff news alongside positive economic data.
The WSJ Dollar Index—which measures the currency against a basket of 16 others—gained 0.35% on Friday after falling earlier in the day.
Gold prices and the dollar tend to move inversely to one another, with a rise in the dollar making dollar-denominated commodities more expensive to other currency holders.
Economic data released Friday morning also boosted the dollar, with industrial output and consumer sentiment figures both coming in above expectations.
U.S. consumer sentiment improved markedly in September, rising to the second-highest level since 2004, while industrial output rose for a third straight month.
Shopkeepers wait for customers at a jewelry shop in Peshawar, Pakistan, in December 2017. Photo: fayaz aziz/Reuters
On top of that, Federal Reserve Bank of Chicago president Charles Evans said in a speech that he expected the U.S. central bank to press forward with rate rises amid a bright economic outlook.
Speaking in Fort Wayne, Ind., Mr. Evans said the strong growth fundamentals and positive inflation outlook meant it was time for the Federal Reserve “to return to the conventional monetary policy-making of yesteryear” and gradually adjust interest rates.
Prior to the tariff-inspired jump in the dollar, RBC Capital Markets commodities strategist Christopher Louney said the trajectory of the greenback was weighing heavily on gold prices.
“The dollar remains in the driver’s seat with the rolling correlation between the two consistently remaining in strong negative territory,” Mr. Louney said.
“We look towards news around trade and any possible policy shifts or agreements as the most important factors to watch going forward, as that will likely dictate trends in the gold/dollar relationship. Even if gold has experienced some relief recently and looks set for an upswing, the pressure is not yet off.”
Among other metals, silver dropped 0.71% to $14.042 a troy ounce, zinc fell 1.1% to $2,334 a metric ton, aluminum lost 1.02% to $2,043 a metric ton, and nickel gained 0.4% to $12,655 a metric ton.