Gold prices rose in European markets on Monday, extending gains for the fourth consecutive day and reaching a three-week high, as safe-haven buying intensified amid fears of an escalating global trade war following Trump’s threat to impose tariffs on the European Union and Mexico.
Gains in the precious metal were capped by the strength of the U.S. dollar in the foreign exchange market, as investors await key U.S. inflation data this week, which will offer strong clues about the likelihood of interest rate cuts in the second half of the year.
The Price
• Gold prices today: Gold rose by more than 0.55% to $3,375.01, up from the opening level of $3,355.72, after touching a session low of $3,353.84.
• On Friday, gold prices settled with a 0.95% increase, marking a third straight daily gain, driven by Trump’s tariff announcements.
• Over the past week, gold rose by 0.55%, its second consecutive weekly gain.
Trump’s Trade Threats
On Saturday, U.S. President Donald Trump announced new tariff measures in separate letters addressed to European Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum, both published on his “Truth” social media platform.
Trump threatened to impose 30% tariffs on the EU and Mexico — two of the U.S.’s largest trading partners — starting August 1.
Both the EU and Mexico described the tariffs as unfair and disruptive. The EU said it would extend its suspension of retaliatory measures on U.S. tariffs until early August and would continue pressing for a negotiated settlement.
U.S. Dollar
The U.S. dollar index rose by 0.25% on Monday, extending gains for the third consecutive session and hitting a three-week high of 98.10 points, reflecting continued dollar strength against a basket of major and minor currencies.
Carol Kong, currency strategist at Commonwealth Bank of Australia, commented that financial markets appear increasingly indifferent to President Trump’s tariff threats, which have become a repeated theme in recent months.
Separately, Trump stated on Sunday that it would be “great” if Federal Reserve Chair Jerome Powell resigned, once again threatening central bank independence as he called for rate cuts.
U.S. Interest Rates
• According to the CME Group’s FedWatch tool, markets currently price in a 7% chance of a 25 basis-point rate cut at the July meeting, with a 93% chance of no change.
• For September, odds of a 25 basis-point cut are steady at 61%, with the probability of no change at 39%.
• Investors are closely watching this week’s release of U.S. consumer and producer price data for June to reassess these expectations.
Gold Outlook
• Kelvin Wong, market analyst for the Asia-Pacific region at OANDA, said: “We’re seeing a resurgence in safe-haven demand amid uncertainty over the implementation of U.S. global trade tariff policy.”
• Wong added that the short-term outlook for gold appears positive, and if gold closes above $3,360, it could rise toward the next resistance level at $3,435.
SPDR Fund
Holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by approximately 1.17 metric tons on Friday, bringing the total to 947.64 metric tons.
