Gold price increases as US trade tensions boost safe-haven demand

BENGALURU: Gold prices bounced back on Thursday after touching a one-month low in the previous session, as renewed concerns over US trade policies drove investors towards the safety of bullion.

By 0041 GMT, spot gold was up 0.4 per cent at US$3,286.99 per ounce. A day earlier, prices had dipped to their lowest since June 30. In contrast, US gold futures slipped 0.5 per cent to US$3,282.10.

The rebound came after US President Donald Trump rolled out a series of new tariff measures on Wednesday. These included adjustments to planned duties on copper imports and goods from Brazil, as well as the removal of an exemption on low-value shipments from abroad.

Trump also unveiled a new trade agreement with South Korea that includes a 15 per cent tariff on its exports to the US. He confirmed a 25 per cent tariff on Indian goods would take effect on Friday, though he noted that talks with New Delhi were still ongoing. On China, Trump struck a more hopeful tone, saying he expected a “fair deal” to emerge from negotiations.

Despite this flurry of trade actions, the US Federal Reserve opted to keep interest rates unchanged at its policy meeting on Wednesday. However, comments from Fed Chair Jerome Powell were less dovish than expected, dampening hopes of a rate cut in September.

Gold often gains during times of economic uncertainty and typically performs better when interest rates are low, as it does not offer a yield.

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Investors are now waiting for the US core Personal Consumption Expenditures (PCE) index data, due later in the day. Analysts polled by Reuters expect the data to show a 0.3 per cent rise month on month and a 2.7 per cent increase year on year.

Meanwhile, recent figures showed the US economy grew faster than expected in the second quarter. However, economists noted the numbers gave an overly rosy picture, as the improvement was largely driven by falling imports, while domestic demand grew at its slowest pace in over two years.

In other precious metals, spot silver held steady at US$37.10 per ounce. Platinum slipped 0.3 per cent to US$1,308.85, while palladium rose 0.9 per cent to US$1,216.25.

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