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Gold prices rose slightly in Asian trading on Friday, recovering from the previous session’s losses. The precious metal remained on track for a weekly increase, fueled by concerns over the U.S. fiscal deficit and impending decisions regarding tariff rates from Washington.
Spot Gold rose 0.5% to $3,341.34 an ounce, while Gold Futures for August gained 0.2% to $3,349.52/oz by 00:10 ET (04:10 GMT). Despite a 1% decline on Thursday after a robust U.S. jobs report, gold was still on track to rise 1.8% this week, following two consecutive weekly declines.
Trump’s Tariff Announcement Adds Uncertainty to the Market
The rise in gold prices was partly driven by the anticipation of new tariffs from President Donald Trump, who announced on Thursday that Washington would begin issuing formal letters to major economies outlining new U.S. export tariff rates by Friday. Trump emphasized that the U.S. would bypass lengthy negotiations with over 170 countries, instead imposing flat tariff rates ranging between 20% and 30%.
This move follows a pattern of limited trade agreements, with the U.S. only having signed deals with the UK, Vietnam, and a framework agreement with China. The lack of comprehensive trade deals has added to global trade friction and heightened uncertainty, which has provided some support to gold prices. Gold is traditionally seen as a safe-haven asset during times of global trade tensions.
Concerns Over U.S. Fiscal Deficit Fuel Gold’s Weekly Gain
Gold was also supported this week by concerns surrounding the U.S. fiscal deficit, with Congress clearing President Trump’s sweeping tax-cut bill on Thursday. The bill, which cuts taxes, boosts border security, and reduces social safety-net spending, is now on its way to Trump’s desk for final approval.
The bill is projected to add $3.4 trillion to the national debt, which currently stands at $36.2 trillion, according to the nonpartisan Congressional Budget Office. As the U.S. continues to grapple with increasing debt levels, these concerns have contributed to the strengthening of gold prices.
Jobs Data and Fed Rate Cut Expectations
Despite these factors, gold prices experienced a dip on Thursday following the release of better-than-expected U.S. job data for June. The U.S. economy added more jobs than anticipated, signaling resilience in the labor market. The robust job report led markets to scale back expectations for a Federal Reserve rate cut in July.
Higher interest rates tend to reduce gold demand because they make interest-bearing assets more attractive, increasing the opportunity cost of holding non-yielding gold. As a result, the market response to the positive jobs data weighed on gold prices in the short term.
Mixed Performance in Metal Markets
While gold saw some upward movement, the broader metal markets were subdued, with the U.S. dollar holding strong after the positive jobs data. The US Dollar Index dipped slightly by 0.1% during Asian trading, maintaining the strong gains it saw earlier in the week.
Platinum Futures rose 0.5% to $1,385.80/oz, while Silver Futures fell 0.3% to $37.00/oz. Meanwhile, copper prices saw slight declines, with benchmark Copper Futures on the London Metal Exchange edging 0.3% lower to $9,923.65 a ton, and U.S. Copper Futures falling 0.4% to $5.115 a pound.
Outlook for Gold and Other Precious Metals
Looking ahead, the key drivers for gold will remain the ongoing uncertainty in global trade relations, especially regarding the tariff decisions from Washington, and the potential fiscal challenges faced by the U.S. The market is also awaiting further clarity on U.S. interest rate decisions, which will heavily influence the demand for gold and other precious metals.
The potential for higher tariffs and ongoing fiscal issues are likely to continue supporting gold’s safe-haven appeal, while any signs of economic strength could limit its upside potential as traders shift focus to the broader implications for interest rates and inflation.
