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Gold prices inched higher in Asian trading on Thursday, bolstered by growing safe-haven demand as U.S. President Donald Trump intensified trade tensions with new tariff threats, while renewed expectations for a Federal Reserve rate cut provided additional support for the precious metal.
Gold Prices Climb on Tariff Concerns and Fed Expectations
Spot Gold edged up by 0.2%, reaching $3,375.25 an ounce, while December Gold Futures rose 0.3%, settling at $3,440.70 per ounce by 01:45 ET (05:45 GMT).
The latest uptick in gold prices came as President Trump threatened to impose a 100% tariff on imported semiconductors from specific countries unless they invest in U.S. chip manufacturing. This move is intended to boost domestic production but has raised concerns about further disruptions to global supply chains and potential inflationary pressures. Investors flocked to gold, traditionally considered a hedge against both inflation and market volatility, as they worried about rising input costs driven by these trade policies.
In addition to semiconductor tariffs, Trump also announced a doubling of tariffs on imports from India, increasing them to 50%, due to the country’s continued purchase of Russian oil. Trump posted the news on Truth Social, stating that reciprocal tariffs would take effect at midnight, adding more fuel to investor concerns.
Increased Expectations for Fed Rate Cuts
Gold’s appeal as a safe-haven asset was also bolstered by growing expectations that the Federal Reserve will begin cutting interest rates as early as September. This shift in market sentiment follows weaker-than-expected economic data, including a slowdown in the U.S. services sector in July and disappointing nonfarm payrolls from the previous week.
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, which has strengthened its attractiveness to investors.
Speeches from Federal Reserve policymakers have also suggested a potential move toward easing, though uncertainty remains surrounding the impact of tariff-driven inflation concerns on the Fed’s decision.
Mixed Moves in Other Precious Metals
In contrast to gold’s gains, platinum futures fell by 0.4% to $1,348.95 per ounce. Meanwhile, silver futures jumped by 0.7%, reaching $38.158 per ounce, benefiting from some investor interest amid broader market uncertainty.
Benchmark copper futures on the London Metal Exchange remained steady at $9,698.65 per ton, while U.S. copper futures rose 0.2%, hitting $4.42 per pound.
Investors are also focusing on Chinese trade data, which showed a surge in exports, suggesting a potential easing of U.S.-China trade tensions. This data could have implications for global demand, particularly in the industrial metals sector.
Conclusion
Gold’s steady rise amid heightened tariff threats and expectations of a Fed rate cut reflects the ongoing uncertainty in global markets. While the metal continues to benefit from its status as a safe-haven asset, market participants will remain closely watching economic data and geopolitical developments, particularly in regard to trade relations and potential inflationary pressures.
