Gold prices slip lower as U.S.-Japan trade deal hits demand for havens

Investing.com-- Gold prices slipped slightly Wednesday, pulling back from recent highs after the trade deal between the U.S. and Japan boosted risk appetite and hurt haven demand.

At 05:05 ET (09:05 GMT), spot gold fell 0.1% to $3,429.01 an ounce, while gold futures fell 0.1% to $3,440.60/oz. 

U.S.-Japan trade deal hurts safe havens 

Gold, and other safe havens, registered losses on Wednesday after U.S. President Donald Trump announced a trade deal with Japan, which will see imports from the Asian economic giant subject to a 15% tariff.

The 15% figure is lower than the 25% levy threatened by Trump earlier, with lower tariffs on Japan’s automobile exports also offering some relief. Japanese stock markets rallied to one-year highs on Wednesday as risk sentiment received a boost.

However, losses were minimal as Washington signaled that Trump’s 50% tariffs on steel and aluminum will remain.

Optimism over the deal was also clouded by heightened political uncertainty in Japan, amid growing speculation that Prime Minister Shigeru Ishiba will resign after his party suffered a crushing defeat in the upper house elections. 

Gold is sitting on a gain of over 2% so far this week, trading within sight of a $3,500/oz record high hit in April. 

Prices are up around 30% so far this year with the global trade war, geopolitical risks and central bank buying the key drivers for the precious metal’s rally.

Other precious metals have also seen gains this week, with spot platinum and spot silver trading up between 1% and 3% this week, and both metals clocking mild gains on Wednesday.

Copper mixed amid tariffs uncertainty 

Among industrial metals, benchmark copper futures on the London Metal Exchange fell 0.1% to $9,911.15 a ton, while COMEX copper futures rose 1% to $5.7768 a pound. 

While the U.S.-Japan trade deal does highlight some progress in U.S. trade policy, markets remained largely on edge over a brewing trade war with the European Union. The bloc was seen preparing retaliatory tariffs against the U.S. after Washington pushed for a higher tariff level than EU leaders were demanding. 

That said, Chinese Customs data earlier this month showed imports of refined copper jumped 15% in June from the previous month, according to ING, in a note.

China’s imports of U.S. copper scrap slumped to the lowest in 21 years last month, with a 50% tariff on copper set to take effect in two weeks. Shipments plunged below 2,000 tonnes. This is down from 14,023 tonnes in May and below the monthly average of around 36,600 tonnes last year, Chinese customs data show.

The U.S. is a net exporter of copper scrap, and China has been the top destination for U.S. exports.

"Questions remain about the details of the upcoming copper tariffs. There are still no details on whether the duties would apply to all copper products or whether there will be any exemptions. For example, aluminium scrap is excluded from the latest tariffs," said ING.

Ambar Warrick contributed to this article