HSBC-Precious Metals Daily Gold surges on low volume；can retreat on trade progress-20250505

Market focus, emerging trends

With many of the world’s major trading centers including Hong Kong, mainlandChina, Japan, the UK, and parts of Europe closed for various holidays, gold surged inthin volume, aided by a sluggish USD. Over the weekend, President Trump gave anextended interview to NBC’s Meet The Press program in which he floated the idea ofputting tariffs on foreign production of movies, a step that would move escalating tariffpolicy beyond goods and into services. He also stated that he may reduce tariffs onproducts made in China to get China to the negotiating table. On balance hiscomments were enough to jumpstart another gold rally. Gold buoyed silver and thePGMs, but in thin trading.

Light trading volume continued in US hours, with gold surging higher. The economicdata were partially supportive of bullion. The Institute for Supply Managementreported that its nonmanufacturing purchasing managers index increased to 51.6 lastmonth. This was above the Reuters consensus expectation of 50.6. The ISM non-manufacturing prices paid for April jumped to 65.1vs 60.9 in March. While the servicesector picked up above expectations, prices paid also rose. This was not the maindriver of gold, however. While sluggish yields helped buoy gold, the real drivers wereongoing tariff uncertainty combined with very thin trading conditions, which allowedfor a rally. Silver lost a portion of early gains and PGMs fell, possibly on weakphysical demand.