Gold prices tick higher on fresh U.S. tariff threats, Fed rate cut hopes

Investing.com -- Gold prices edged higher Thursday, aided by growing safe-haven demand after fresh tariff threats from U.S. President Donald Trump and weak U.S. economic data, which renewed bets on a Federal Reserve interest rate cut.

At 04:30 ET (08:30 GMT), Spot Gold edged up 0.1% to $3,373.80 an ounce, while Gold Futures for December gained 0.4% to $3,447.90/oz. 

Trump threatens semiconductor tariffs

Investor appetite for bullion strengthened after Trump said the U.S. would impose a 100% tariff on imported semiconductors from certain countries unless they invest in American chip manufacturing. 

The policy aims to boost domestic production but sparked concerns over further disruptions to global supply chains and higher inflation.

Trump also signed an order, doubling U.S. tariffs on imports from India to 50%, citing the country’s purchase of Russian oil. 

In a post on Truth Social late Wednesday, Trump said reciprocal tariffs would take effect at midnight, keeping investors on edge.

The prospect of rising input costs and trade friction supported demand for gold, traditionally seen as a hedge against inflation and market volatility.

Markets scale up Fed rate cut bets 

Bullion also found support from growing expectations that the Federal Reserve will begin cutting interest rates as early as September. 

Data released this week showed the U.S. services sector slowed in July, which followed last week’s disappointing nonfarm payrolls data.

Weekly initial jobless claims are due later in the session, and are expected to show that initial claims for unemployment benefits rose by 3,000 to 221,000 for the week ended August 2, adding to the notion of a slowing U.S. economy.

Markets are now pricing in a 95% chance of a rate cut in September, according to CME’s FedWatch Tool. 

Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

Metal markets gain on China trade data 

Elsewhere, Platinum Futures rose 1% to $1,353.70/oz, while Silver Futures jumped 0.9% to $38.250/oz.

Benchmark Copper Futures on the London Metal Exchange were up 0.3% to $9,719.20 a ton, while U.S. Copper Futures edged up 0.5% to $4.4328 a pound.

Investors also assessed Chinese trade balance data, showing a surge in exports amid signs of easing U.S.-China trade tensions.

Ayushman Ojha contributed to this article