Gold prices tick higher on fresh US tariff threats, Fed rate cut hopes
Investing.com-- Gold prices steadied in Asian trade on Tuesday after U.S. President Donald Trump’s tariff threats spurred some safe haven demand, although a recovery in the dollar limited gains in metal markets.
The yellow metal advanced on Monday after Trump released letters outlining steep tariffs against several major Asian and African countries. But Trump also postponed his tariff deadline to August 1 and signaled openness to more trade talks.
The dollar firmed on Trump’s tariff threat, while expectations of steady U.S. rates in the near-term also benefited the greenback. Strength in the dollar pressured metal markets.
Spot gold fell marginally to $3,334.22 an ounce, while gold futures for September were flat at $3,343.70/oz by 01:22 ET (05:22 GMT).
Trump tariff comments buoy risk, limit gold upside
Trump told reporters on Monday that he was not a “100% firm” on his August 1 deadline, and that his administration was open to more trade dialogue.
His comments, coupled with the recent postponement of the July 9 deadline, spurred some bets that the president will not make good on his tariff threats.
This notion boosted risk appetite on Tuesday, with Asian stocks advancing and Wall Street futures reversing early losses.
Still, Trump released a slew of letters on Monday outlining higher trade tariffs on several Asian and African countries. These include a 25% tariff on South Korea, Japan, Malaysia, and Kazakhstan, a 30% duty on South Africa, a 32% duty on Indonesia, a 35% levy on Bangladesh, and a 36% levy on Thailand.
The letters had battered risk appetite, sparking steep losses on Wall Street while also helping gold prices advance.
The yellow metal was nursing a largely rangebound performance in recent weeks, as risk-aversion around Trump’s tariffs was limited, while strong U.S. economic data saw traders pricing in a smaller chance that U.S. interest rates will fall in the near-term.
But gold still remained in sight of a $3,500 record high hit earlier this year.
Dollar strength weighs on metal prices, Fed minutes awaited
The dollar fell slightly in Asian trade on Tuesday, but was sitting on a sharp overnight bounce following Trump’s tariff letters.
The greenback largely maintained its rebound from recent three-year lows, especially as strong U.S. economic data fueled bets that the Federal Reserve will not cut interest rates in the coming months. Trump’s tariff threats also spurred some demand for the greenback, amid fears that the levies will be inflationary for the U.S. economy.
Strength in the dollar weighed on metal prices, limiting their upside on Tuesday. Platinum futures rose 0.1% to $1,383.75/oz, while silver futures rose 0.3% to $37.008/oz, with both metals remaining close to recent multi-year highs.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.2% to $9,839.80 a ton, while U.S. copper futures rose 0.4% to $5.0260 a pound.
The minutes of the Fed’s June meeting are due later this week, and are expected to provide more insight into the central bank’s plans to cut interest rates. The Fed had maintained a largely hawkish stance during the meeting, remaining non-committal towards further easing.