NEW YORK: Gold prices firmed on Tuesday as concerns over the global trade war fuelled demand for safe-haven assets, while investors awaited a key US inflation reading.
Spot gold rose 0.4% to $3,354.84 per ounce, by 1153 GMT. US gold futures were up 0.1% at $3,363.40. The US dollar was down 0.1%, making gold cheaper for buyers holding other currencies. “Gold is edging higher as bulls look to take advantage of the dollar that’s a touch lighter today,” said Han Tan, chief market analyst at Nemo.Money.
“Gold enjoys plenty of supportive factors, from expectations for Fed rate cuts, US President Donald Trump’s tariff threats, as well as persistent geopolitical and economic risks.” Trump escalated his trade war on Saturday, announcing a 30% tariff on most European Union and Mexican imports, after issuing similar warnings to other trading partners. The EU responded on Monday by accusing the US of resisting efforts to strike a trade deal and threatened countermeasures if no agreement is reached.
On the geopolitical front, Trump has privately urged Ukraine to ramp up strikes deep inside Russia, even asking Ukrainian President Volodymyr Zelenskiy if Moscow could be targeted with US-supplied long-range weapons, the Financial Times reported on Tuesday. The Kremlin meanwhile said on Tuesday that Trump’s recent statements, including a threat of sanctions on buyers of Russian exports, are serious and require analysis.
Elsewhere, the US consumer price index (CPI) report, due at 1230 GMT, could give investors more guidance on the Federal Reserve’s policy path. US consumer prices likely picked up in June, potentially marking the start of a long-anticipated, tariff-induced increase in inflation that has left the Fed cautious about resuming rate cuts. Elsewhere, spot silver gained 0.2% to $38.22 per ounce, after hitting its highest level since September 2011 on Monday.
“If the current gold to silver price ratio is maintained, at gold prices above $3,440/oz, we will see silver above $40/oz,” said WisdomTree commodities strategist Nitesh Shah. Platinum rose 1.6% to $1,385.60, while palladium rose 1.8% to $1,215.30.
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