Gold prices stabilized during Asian trading on Tuesday after US President Donald Trump's threats to impose tariffs sparked some demand for safe-haven assets, although a recovery in the dollar limited gains in metal markets. This is reported by investing.com, writes UNN.
The yellow metal rose on Monday after Trump published letters of intent to impose high tariffs against several major Asian and African countries. However, he also moved the deadline for imposing tariffs to August 1 and expressed readiness for further trade negotiations.
The dollar strengthened amid Trump's tariff threats, and expectations of stable interest rates in the US in the near future also supported the American currency. The strengthening dollar put pressure on metal markets.
Spot gold prices slightly decreased to $3,334.22 per ounce, while gold futures for September delivery remained unchanged at $3,343.70 per ounce as of 05:22 Moscow time.
Trump's comments on tariffs support risk appetite and limit gold's gains
On Monday, Trump told reporters that he was "not 100% sure" about meeting his August 1 deadline and that his administration was open to further trade dialogue.
His statements, as well as the recent postponement of the deadline from July 9, led to speculation that the president might not follow through on his tariff threats.
This perception boosted risk appetite on Tuesday, with Asian stocks rising and Wall Street futures recovering early losses.
However, on Monday, Trump published a series of letters of intent to impose increased trade tariffs on several Asian and African countries. These include: 25% tariffs for South Korea, Japan, Malaysia, and Kazakhstan, 30% tariff for South Africa, 32% for Indonesia, 35% for Bangladesh, and 36% for Thailand.
These letters dampened risk appetite, causing a sharp drop on Wall Street while contributing to rising gold prices.
In recent weeks, the yellow metal has mostly traded in a limited range, as risk aversion due to Trump's tariffs remained subdued, and strong US economic data led traders to expect less interest rate cuts in the near future.
However, gold still remained within reach of its record high of $3,500, recorded earlier this year.
Stronger dollar weighs on metal prices, Fed minutes expected
The dollar edged lower in Asian trading on Tuesday but held on to sharp overnight gains that came on the back of Trump's tariff letters.
The American currency has generally held off recent three-year lows, especially amid strong US economic data, which has fueled expectations that the Federal Reserve will not cut rates in the coming months. Trump's tariff threats also sparked some demand for the dollar due to fears that these levies would contribute to inflation in the US economy.
The strengthening dollar weighed on metal prices, limiting their gains on Tuesday. Platinum futures rose 0.1% to $1,383.75 per ounce, and silver futures rose 0.3% to $37.008 per ounce; both metals remained near recent multi-year highs.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 0.2% to $9,839.80 per tonne, and US copper futures rose 0.4% to $5.0260 per pound.
The minutes of the Fed's June meeting are expected later this week and are anticipated to provide more information on the central bank's plans for rate cuts. At that meeting, the Fed largely took a hawkish stance and did not commit to further policy easing.