Gold hits three-week high as tariff threats revive safe-haven demand 

SINGAPORE: Gold prices climbed to their highest level in three weeks on Monday, as investors turned to the precious metal following renewed trade tensions between the United States, the European Union, and Mexico. 

Spot gold held steady at $3,354.83 per ounce at 0410 GMT, after briefly touching its highest mark since June 23 earlier in the session. Meanwhile, US gold futures edged up by 0.2 per cent to $3,371. 

The move came after US President Donald Trump threatened over the weekend to impose a 30 per cent tariff on imports from Mexico and the European Union starting August 1, following unsuccessful trade negotiations. The announcement rattled global markets and pushed investors towards safe-haven assets like gold. 

“There’s a resurgence of safe-haven demand due to the uncertainty surrounding the US tariff strategy,” said Kelvin Wong, senior market analyst at OANDA. “If gold closes above $3,360 today, we may see it testing the next resistance level near $3,435.” 

Both Mexico and the EU slammed the proposed tariffs as unfair and damaging to trade. The EU also announced it would keep its countermeasures against US tariffs on hold until early August while seeking a negotiated solution.

Looking ahead, markets are closely watching US inflation data for June, due on Tuesday, for more insight into the Federal Reserve’s next move on interest rates. Traders are currently pricing in slightly more than 50 basis points of rate cuts by the end of the year. Lower interest rates generally support gold, which does not yield interest, by reducing the opportunity cost of holding it. 

However, a modest rise in the dollar index—up 0.1 per cent against a basket of major currencies—limited further gains for gold, as it made the metal more expensive for buyers using other currencies. 

In other precious metals, silver jumped 1.2 per cent to $38.82 per ounce. Platinum slipped 1.3 per cent to $1,380.67, while palladium inched up 0.2 per cent to $1,216.77. Meanwhile, speculators trimmed their net long positions in gold futures by 1,855 contracts to 134,842 in the week ending July 8. 

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