WASHINGTON (dpa-AFX) - Gold prices rose on Friday and remained on track for their first monthly gain since January as a broadening of the trade conflict sapped appetite for risky assets.
Spot gold advanced 0.8 percent to $1,298.27 per ounce and remained on track for a second consecutive weekly gain. U.S. gold futures climbed 0.85 percent to $1,298 an ounce.
Government bonds rallied, European markets tumbled in early trade and U.S. stock index futures pointed to sharp losses for Wall Street after U.S. President Donald Trump announced new tariffs on all goods coming from Mexico to curb illegal immigration across the border to the U.S.
In a tweet, Trump said that from 10 June a 5 percent tariff would be imposed and would slowly rise until the situation is resolved.
The yield on the 2-year U.S. Treasury note dropped below the 2 percent threshold for the first time since February 2018 on fears that a prolonged trade conflict will trigger a global recession.
The dollar index is still trading just below 2-year highs ahead of the ISM manufacturing and non-manufacturing PMIs for May, due on Monday and Wednesday respectively.
Overnight, a reading on U.S. inflation came in much weaker than initially thought in the first quarter, casting doubts on the Fed's view that recent slowdown in inflation reflected temporary factors.
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