Pedro Goncalves writes:
Gold (GC=F) prices rose to a two-week high on Tuesday as renewed fears over US president Donald Trump’s tariff plans boosted interest in the safe-haven metal.
Gold futures gained 1.6% to $3,377.40 per ounce at the time of writing, while the spot price rose 3% to $3,376.14 an ounce.
“We are seeing a continued flow of safe-haven demand, keeping gold prices elevated. Prices are going to trade above $3,000 level at least in the near-term,” Jim Wyckoff, senior analyst at Kitco Metals, told Reuters.
The rally in gold prices follows Trump’s announcement on Sunday of a 100% tariff on foreign films, a move that raised eyebrows and stoked fears of broader trade tensions.
The announcement, combined with Trump’s comments that no talks with China are planned for the coming week, has heightened concerns about the economic fallout from a potential global trade conflict.
The US president, however, suggested that he is open to reducing tariffs “at some point”, leaving the door slightly open for future negotiations.
Market watchers are also closely eyeing the US Federal Reserve’s upcoming interest rate decision and comments from Fed chair Jerome Powell on Wednesday, with investors looking for clues on the central bank’s monetary policy path.
Goldman Sachs (GS) analysts have predicted that the Fed will hold off on cuts for the time being but will likely announce three 25 basis point reductions in the coming months, in July, September, and October.
“Fed officials will want to see evidence from labour market and other hard data before cutting. We think this will take a couple of months and therefore expect three 25bp cuts in July, September, and October,” the investment bank said in a note.
Gold, which provides a safeguard against political and financial instability, tends to thrive in low-interest-rate environments, further boosting its appeal as a safe-haven asset amid rising uncertainty.
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