Gold ticks up as dollar weakens and trade tensions rise
What's the story
Gold prices witnessed a slight increase on Thursday, driven by a dip in the dollar and bond yields. The rise comes amid heightened trade tensions as US President Donald Trump intensifies his tariff war strategy. Spot gold rose 0.3% to $3,322.46 per ounce while US gold futures also gained 0.3%, reaching $3,331 per ounce.
Tariff expansion
New tariffs on copper imports
On Wednesday, Trump announced a new 50% tariff on US copper imports as well as goods from Brazil, both effective from August 1. He also issued tariff notices for seven minor trading partners on Thursday, adding to 14 others earlier this week, including South Korea and Japan. These tariffs would be levied at 25% unless agreements are reached by August 1.
Market reaction
Trade talks with China, EU are going well: Trump
Despite the aggressive tariff strategy, Trump claimed that trade talks with China and the European Union were going well. However, Matt Simpson, a senior analyst at City Index, said, "The market impact of tariffs seems to lessen with each new headline." He added that "tariff fatigue is here," and traders are looking for a new catalyst to spark volatility from its lull.
Economic factors
US dollar dips; Fed's rate cut views minutes released
The US dollar index fell 0.3%, while the yield on benchmark 10-year US Treasury notes fell from a three-week high. Lower yields make holding non-yielding bullion less costly, while a weaker dollar makes gold cheaper for holders of other currencies. Minutes from the Federal Reserve's June meeting revealed that only "a couple" of Fed officials thought interest rate cuts could happen as early as this month due to inflation concerns tied to Trump's tariff policies.