The gold price was higher today as investors reacted to a ramp-up in U.S. tariffs and the prospect of lower interest rates.
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The Gold Spot US dollar price was up 0.25% at $3,388 in early trading as investors reacted to the latest Trump tariff tirade.
Tariff Haven
New tariffs have been imposed on over 90 countries around the world, including hiking the levies on imports from India to 50% over its purchase of Russian oil. Foreign-made computer chips and pharmaceuticals may also soon be slapped with punishingly high tariffs to tempt more manufacturers to shift production to the U.S.
This increase in trade tension made gold once again look like a safe haven for investors worried about the impact of tariffs on global economic growth.
It has helped the gold price soar over 28% this year to date.
The increased bullishness around gold was also helped by the decision by the Bank of England to cut interest rates in the U.K. to 4%. This led to some read-across to the U.S. and the prospects of a Federal Reserve cut to interest rates in September.
Interest Rates
Markets are now increasingly pricing in the chance of a cut next month following weak economic data including a slowdown in the U.S. services sector in July and job numbers. Indeed, there is a 95% chance of a rate cut in September, according to CME’s (CME) FedWatch tool.
Lower interest rates are good news for gold as they make holding non-yielding assets more attractive.
Despite hopes of a potential ceasefire in Ukraine with the prospects of talks between Trump and Russia’s Vladimir Putin next week, there is still plenty of global uncertainty out there to keep gold investors on their toes.
They also continue to weigh up the impact Trump’s beautiful bill and the widening of the U.S. deficit by $3.4 trillion over the next decade will have on gold demand going forward.
The result, as can be seen by the technical analysis below, is a general bullishness in bullion.
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