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Gold prices fell slightly in Asian trading on Tuesday, retreating from the one-month high seen in the previous session. The pullback came amid ongoing uncertainty surrounding U.S. trade tariffs and interest rates, which continue to bolster haven demand for gold and other precious metals.
Spot gold dropped 0.2% to $3,389.39 an ounce, while gold futures fell 0.1% to $3,402.00/oz by 00:38 ET (04:38 GMT). This slight decline followed a 1.4% surge on Monday, when gold prices briefly neared the $3,400/oz mark.
US Tariff Fears Continue to Mount as August 1 Deadline Approaches
The recent pullback in gold prices comes amid persistent concerns over the impact of U.S. tariffs, which are set to take effect on August 1. Investors remain anxious as the Trump administration pushes for tariffs of between 20% and 50% on major U.S. trading partners, including the European Union.
Risk sentiment was rattled by waning hopes for a trade deal between the EU and the U.S., heightening the possibility of a trade war. Market participants are growing increasingly cautious as the EU prepares retaliatory tariff measures in response to Washington’s proposed tariffs. With only a short time left before the August 1 deadline, concerns about the implementation of these tariffs are driving market volatility.
Trump’s administration has signaled that it is unlikely to extend the deadline, with only a limited number of trade deals announced in recent weeks. This has led to fears that the full scope of the proposed tariffs will be enacted, further stoking economic uncertainty.
Haven Demand for Gold Surges Amid Tariff and Interest Rate Uncertainty
The looming trade dispute between the U.S. and the EU, combined with uncertainty around U.S. interest rates, has been driving haven demand for gold. The Federal Reserve is widely expected to keep interest rates unchanged at its upcoming meeting next week, despite growing calls from President Trump to cut rates immediately.
The uncertainty surrounding the Fed’s next steps, paired with ongoing trade tensions, has resulted in a flight to safety, boosting the appeal of gold as a safe haven asset.
Silver and Platinum Underperform Gold, Despite Outpacing it in Recent Months
While gold saw some weakness on Tuesday, silver and platinum continued to outperform gold in recent months, benefiting from similar haven demand. However, both metals also saw some pullbacks on Tuesday. Spot silver fell 0.5% to $38.7365/oz, while spot platinum decreased 0.1% to $1,452.38/oz.
Industrial Metals Struggle Amid Tariff Concerns
The impact of U.S. tariffs was also felt in the industrial metals market. Copper futures on the London Metal Exchange fell 0.4% to $9,829.85 per ton, while COMEX copper futures dropped 0.9% to $5.5900 per pound. Trump’s 50% tariff on copper is set to take effect on August 1, contributing to the metal’s price weakness as investors digest the potential economic fallout from the escalating trade conflict.
Gold prices, along with other precious and industrial metals, are facing volatility driven by the twin forces of U.S. trade tariffs and interest rate uncertainty. The August 1 tariff deadline remains a significant factor influencing market sentiment, with investors flocking to safe-haven assets like gold amid rising concerns about a global trade war and its economic ramifications.
As U.S. tariffs continue to loom, gold’s haven demand is likely to persist, while metals like silver and platinum may continue to see outperformance, though copper remains under pressure as the trade conflict escalates. The coming weeks will likely see heightened volatility, as interest rate decisions and trade negotiations continue to play key roles in shaping investor sentiment.
