📊
Gold pressured by trade tariffs
On Monday, U.S. President Donald Trump posted letters on Truth Social addressed to the leaders of 14 countries. He threatened to impose tariffs ranging from 25% to 40% on imports unless countries address trade imbalances. The letters targeted China, Germany, Japan, Mexico, and India, escalating global trade tensions just weeks ahead of the Republican National Convention. Preliminary estimates suggest the tariffs could affect over $1.2 trillion in goods, raising concerns among multinational exporters and supply chain operators.
👉
Possible effects for traders
However, market fears eased somewhat after Trump signed an executive order late on Monday delaying the implementation of tariffs from 9 July to 1 August, granting over three additional weeks for negotiations. The delay also applies to the sweeping 'reciprocal tariffs' plan targeting most U.S. trade partners. Trump stated this would 'allow allies to come to the table' while maintaining pressure for new bilateral deals.
Adding further pressure on gold, a robust U.S. jobs report released on Friday showed nonfarm payrolls rose by 147,000 in June, significantly above the 110,000 expected. Meanwhile, the unemployment rate fell towards 4.1%. The data have alleviated concerns of a slowing U.S. economy, prompting traders to scale back expectations of a Federal Reserve (Fed) rate cut in July. The CME FedWatch Tool shows the probability of a rate cut this month has fallen below 6%, down from 42% just a week ago. Expectations of a less dovish monetary policy are pushing Treasury yields higher and weighing on demand for non-yielding assets such as gold (XAU).
Gold prices fell towards $3,330 during the Asian and early European trading sessions, sliding from the recent high of $3,410. The decline happened amid optimism that potential trade deals before August could reduce geopolitical risks and the demand for the metal. Analysts at Citi noted that if a last-minute trade deal is reached with China, gold could test support near $3,250 in the coming weeks, while continued uncertainty may trigger a quick rebound towards $3,400.
📲 More trading opportunities in our app
If the link doesn’t work, try a special one for your country:
🇮🇩ID 🇮🇳IN 🇵🇰PK 🇹🇭TH