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Gold prices saw a modest increase in Asian trading on Monday, extending their recent gains as investors sought safe-haven assets amid growing concerns about U.S. President Donald Trump’s trade tariffs and rising geopolitical tensions, particularly over the Russia-Ukraine conflict.
Key Price Movements:
- Spot Gold rose by 0.2%, trading at $3,361.42 per ounce.
- Gold Futures for August gained 0.3%, reaching $3,374.80/oz by 00:40 ET.
- Silver Futures surged by 1.4%, hitting a near 14-year high at $39.493/oz.
Impact of Trump’s Trade Tariffs:
The main catalyst for gold’s rise was President Trump’s recent tariff announcements. Over the weekend, Trump unveiled a 30% tariff on imports from Mexico and the European Union, effective from August 1. This added to an ongoing series of tariff increases, including 50% tariffs on copper and 25% duties on imports from Japan and South Korea. The announcement spurred concerns about the economic disruption from escalating tariffs, increasing demand for gold as a safe haven.
The tariff threats have added uncertainty to global markets, with investors flocking to gold for protection amid fears of a slowdown in economic growth.
Geopolitical Tensions Add to Safe Haven Demand:
In addition to trade concerns, caution surrounding the Russia-Ukraine conflict further supported gold. U.S. President Trump’s announcement that he would send offensive weapons to Ukraine added to worries about the situation escalating. Despite the U.S. efforts to broker a ceasefire, ongoing tensions in the region have spurred further interest in safe-haven assets like gold.
Resilience of the Dollar Limits Metal Gains:
Despite gold’s positive movement, its gains were limited by the strengthening of the U.S. dollar, which continued its recovery from three-year lows. The dollar’s resilience weighed on metal prices in general, with gold and other precious metals facing pressure from the greenback’s advance. U.S. copper futures also saw a decline of 0.5% as traders took profits after hitting record highs in recent sessions, largely due to Trump’s tariff announcements.
Other Precious Metals Performance:
- Silver continued its strong performance, climbing to a 14-year high amid rising demand for industrial metals and the safe-haven appeal.
- Platinum also held its ground near 10-year peaks, despite a slight 0.6% drop, trading at $1,461.40/oz.
Focus on U.S. CPI Data:
Looking ahead, investor focus is shifting to the U.S. consumer price index (CPI) data for June, which is expected to be released on Tuesday. Analysts anticipate an increase in both core and headline inflation, with particular attention on whether the tariffs have contributed to higher prices.
The inflation data will be crucial for the Federal Reserve’s next moves on interest rates. Persistent inflation may prompt the Fed to hold rates steady, despite President Trump’s calls for immediate rate cuts to support the economy.
Outlook:
With tensions high on both the trade and geopolitical fronts, gold and silver are likely to continue attracting safe-haven demand. However, the dollar’s strength and upcoming inflation data will play a pivotal role in determining whether these metals can sustain their upward momentum in the near term.
