Gold prices rise as US trade war uncertainty, mixed China data dent risk

Investing.com-- Gold prices rose in Asian trade on Tuesday as persistent concerns over U.S. President Donald Trump’s trade tariffs kept haven demand in play, while middling economic data from China added to this trend. 

Haven demand was also buoyed by concerns over increasing geopolitical tensions between Russia and Ukraine, after Trump sent more weapons to Kyiv and threatened even tighter sanctions on Russia’s oil industry. 

But resilience in the dollar kept gold trading largely within a $3,300 to $3,500/oz trading range, while broader metal prices made limited headway. Focus was squarely on key upcoming U.S. consumer price index data for more cues on interest rates. 

Spot gold rose 0.6% to $3,364.26 an ounce, while gold futures for September rose 0.4% to $3,373.52/oz by 01:44 ET (05:44 GMT). 

US tariff uncertainty, Russia concerns underpin gold

Gold’s Tuesday gains came as the yellow metal saw some strength in recent sessions, especially amid heightened uncertainty over Trump’s tariffs. The president announced a slew of steep trade tariffs against major economies in the past week, most recently announcing 30% tariffs on Mexico and the European Union.

The EU was seen preparing retaliatory measures against Washington, although Trump did signal some openness for trade talks.

Still, major global economies have just over two weeks to hash out trade deals with Washington, keeping markets concerned that Trump will proceed with the levies and kickstart a renewed global trade war. 

On the geopolitical front, Trump allowed Russia a 50-day period to reach a ceasefire. But he also publicly criticized President Vladimir Putin, while the U.S. sent more weapons to Kyiv, including offensive weapons it can use to strike Moscow. 

Other precious metals were steady on Tuesday, with silver and platinum trading below recent peaks. While the two had vastly outperformed gold in June, they were seen facing some price resistance in recent weeks.

Dollar steady with CPI data on tap

The dollar steadied in Asian trade after logging strong gains in recent sessions, with focus squarely on upcoming CPI data. Strength in the dollar pressured most commodity prices. 

Both headline and core CPI are expected to have risen slightly in June, with the print also set to provide some insight into the inflationary effects of Trump’s tariffs.

Sticky CPI gives the Federal Reserve less impetus to cut interest rates further, with the central bank having flagged little intent to trim interest rates amid uncertainty over Trump’s tariffs. 

Copper muted after mixed China data 

Mixed Chinese economic data also added to the risk aversion, and kept copper prices under pressure. Benchmark copper futures on the London Metal Exchange rose 0.2% to $9,642.20 a ton, while U.S. copper futures rose 0.3% to $5.5460 a pound, steadying after falling sharply from record highs. 

China’s economy grew slightly more than expected in the second quarter, gross domestic product data showed, amid limited U.S. trade headwinds and support from several stimulus measures from Beijing.

But growth still slowed from the prior quarter, while analysts warned that weak prints for June heralded a further slowdown. Chinese retail sales and fixed asset investment read softer than expected for June.

While industrial production did beat expectations, ANZ analysts warned that the Q2 GDP data still presented some weakness in China’s economy, with deflation being a major weight on growth. The initial boost from Beijing’s consumer stimulus measures is also expected to peter out in the second half of the year. 

China is the world’s largest copper importer, with any signs of a cooling economy likely to dent demand expectations for the red metal. 

Still, data on Monday showed China’s copper imports surged 9% in June, ending two consecutive months of declines.