Gold Declines Amidst Awaiting Impact of U.S. Tariffs

Gold Prices Suffer Losses Amidst Awaited Impact of New Tariffs

Global Capitals –

Gold prices experienced slight losses during early trading on Tuesday, with the yellow metal retreating as traders awaited the economic consequences of the tariffs imposed by U.S. President Donald Trump on Canada, Mexico, and China.

Price Update:

By 05:36 GMT, gold in spot transactions fell by 0.1% to $2892.00 per ounce. Meanwhile, U.S. gold futures remained steady at $2902.20 per ounce, according to Reuters data.

Movements in Other Precious Metals:

In other precious metals, silver rose by 0.1% in spot transactions to $31.71 per ounce. Platinum saw an increase of 0.2%, reaching $955.42, while palladium dropped by 0.8% to $930.64 per ounce.

Market Analysis:

Kyle Rodda, a financial markets analyst at Capital.com, stated, “The current pullback in gold prices is part of a broader market shakeout, which could push prices below $2700 before the primary upward trend resumes.” Rodda added that market movement on Tuesday had been limited, despite the apparent deterioration in global trade relations and the weakening dollar due to concerns about a sudden slowdown in U.S. economic growth.

U.S. Tariffs and Their Economic Impact:

The new tariffs imposed by Trump on imports from Mexico and Canada at 25% came into effect on Tuesday, along with an increase in tariffs on Chinese goods to 20%. This escalation in trade tensions threatens to exacerbate economic challenges with the U.S.’s three largest trade partners. In an immediate response, China announced additional tariffs ranging from 10% to 15% on certain U.S. imports starting on March 10, alongside a series of new export restrictions targeting specific U.S. entities.

Gold as a Safe Haven:

The tariffs imposed on imports from Mexico, Canada, and China are widely seen as likely to spur inflation, thus boosting demand for gold as a safe-haven asset. Since the beginning of 2024, gold prices have increased by approximately 10%.

Potential Impact on Interest Rate Policy:

However, the rise in inflation could prompt the U.S. Federal Reserve to keep interest rates elevated for a longer period, which could negatively impact the appeal of gold as a non-yielding asset.

Investors are closely monitoring the upcoming employment report from ADP, expected on Wednesday, as well as the non-farm payrolls report due on Friday, for additional insights into the Fed’s interest rate stance.

Future Outlook:

On the other hand, JPMorgan has maintained a bullish long-term outlook for gold, setting a target price approaching $3000 per ounce by the fourth quarter of 2025.

Sources:

• Reuters
• ADP
• JPMorgan