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Gold prices retreated on Wednesday as traders moved away from safe-haven assets in response to ongoing uncertainty over U.S. trade tariffs and interest rate expectations, opting instead for the strength of the U.S. dollar.
Gold Pressured by Dollar Recovery and Trade Tariff Uncertainty
Spot gold fell by 0.2% to $3,294.88 per ounce, while gold futures for September decreased by 0.4% to $3,303.20/oz as the market saw limited demand for the yellow metal despite the lingering trade tensions. This marks the weakest level for gold in the past nine days.
Traders have shown a preference for the U.S. dollar, which maintained a solid rebound from recent three-year lows. The dollar’s strength was driven by rising expectations that the Federal Reserve would not cut interest rates in the near term, following robust payrolls data from the previous week. This shift toward the dollar reduced gold’s appeal as an alternative safe-haven asset.
The Impact of Trump’s Tariffs on Metal Markets
The uncertainty surrounding President Donald Trump’s trade tariffs continued to weigh heavily on the metals market. Trump’s recent actions of issuing letters outlining steep tariffs against major economies have kept traders cautious. While gold traditionally benefits during times of economic uncertainty, this time the trade tariff concerns did not result in the usual safe-haven demand for gold.
Additionally, the Fed’s caution regarding tariffs has added to the pressure, with the central bank warning that Trump’s tariffs could lead to higher U.S. inflation, diminishing the chances of rate cuts in the coming months.
U.S. Copper Futures Surge Amid Tariff Threats
In stark contrast to gold, U.S. copper prices soared to new record highs after President Trump threatened to impose a 50% tariff on copper imports. On Wednesday, U.S. copper futures rose by 2.6% to $5.6457 a pound, following a record high of $5.8955 per pound the previous day.
The surge in U.S. copper prices was driven by expectations of tighter domestic supply, as Trump’s tariff threat is seen as a move to support U.S. copper production. This would primarily benefit domestic copper producers like Freeport-McMoRan (NYSE: FCX), as the U.S. seeks to reduce its reliance on copper imports. With copper playing an essential role in electricity transmission and electric vehicles, both crucial to the green energy transition, the metal has become increasingly central to U.S. economic and environmental strategies.
Global Copper Prices Decline Amid Weaker Demand
While copper prices in the U.S. surged, international prices faced downward pressure. Benchmark copper futures on the London Metal Exchange fell by 1.6% to $9,644.45 per ton, marking a near three-week low. This decline was largely driven by concerns over weaker demand for copper in China, the world’s largest copper importer. A mixed inflation report from China further fueled fears of softening demand, adding pressure to global copper prices.
Other Metals Weighed Down by Dollar Strength
The broader metals market, including platinum and silver, also saw price declines amid the strengthening dollar. Platinum futures fell by 1.1% to $1,376.35/oz, while silver futures gained slightly to $36.838/oz after experiencing significant highs earlier in June. The overall weakening of gold and other precious metals reflected a trend of profit-taking after strong rallies in the previous month.
As the market braces for ongoing trade tensions and tariff announcements, coupled with the strengthening dollar, the metals sector faces continued volatility. Investors will likely remain cautious in the short term, with gold prices holding steady near the $3,300 mark as the U.S. tariffs on imports and interest rate expectations play a key role in shaping market sentiment.
The mixed picture in the copper market — with surging prices in the U.S. and falling prices globally — further highlights the complexities of the metals market, driven by domestic policy actions and global trade dynamics.
