Trump announced a 30% tariff on goods from the European Union and Mexico over the weekend. The move came days after he announced heightened levies against places like Canada, Brazil and Algeria. Trump’s tariff threats, which he often backs away from shortly after they’re made, have left the markets in some turmoil. Gold is a traditional hedge against geopolitical and economic uncertainty.
Investors will likely await the release of key U.S. inflation reports this week for signals on monetary policy which may also help drive gold’s trajectory. The minutes of the last Federal Reserve policy meeting, which were released last week, renewed speculation on the number of rate cuts the Fed will impose this year.
August gold futures rallied 0.6% last week to settle at $3,364.00 an ounce on Comex, after the front-month contract rose 1.2% Friday. Bullion slipped 0.2% in June after losing 0.1% in May and increasing 5.4% in April. It’s up 27% this year. The metal rose 27% in 2024, its biggest annual gain since 2010. The August contract is currently up $1.00 (+0.03%) an ounce to $3365.00 and the DG spot price is $38.87.
Trump said the new tariffs against the EU and Mexico would begin on Aug. 1 and that the U.S. would respond to any reciprocal moves by those countries: “Whatever number you choose to raise the by, will be added on to the 30% that we charge,” he said in new letters to the leaders of the bloc and Mexico. Collectively, the EU is the largest U.S. trading partner, surpassing any single country.
Tuesday’s release of the June consumer price index data followed by the producer price index on Wednesday will provide the latest assessment of U.S. inflationary conditions. The Fed closely watches both inflation and jobs data when setting monetary policy. Trump has increasingly called on the central bank to accelerate planned interest rate cuts.
But most investors are still betting that the Fed will begin rate cuts at its September meeting, not the next one at the end of this month, according to the CME FedWatch Tool. The Fed kept interest rates unchanged at 4.25% to 4.50% in June, though policymakers signaled that the central bank is still factoring two interest rate cuts this year.
The Fed reduced rates three times in 2024 but has held them steady this year. The central bank began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
Front-month silver futures gained 5.1% last week to settle at $38.96 an ounce on Comex, after the most-active September contract advanced 4.4% Friday. While spot silver hit its highest level since September 2011 earlier in today’s trading session. Indian investors who traditionally focus on gold, are increasingly turning to silver, as its returns this year outpaced those of gold. Silver increased 9.5% in June after adding 0.6% in May and dropping 5.2% in April. It rose 21% in 2024. The September contract is currently up $0.035 (+0.09%) an ounce to $38.990 and the spot price is $38.85.
Spot palladium increased 6.2% last week to $1,225.50 an ounce after gaining 6% Friday. Palladium surged 14% last month after advancing 2.8% in May and falling 4.9% in April. Palladium dropped 17% last year. Currently, the spot price is down $25.20 an ounce to $1205.00.
Spot platinum gained 1.3% last week to $1,401.70 an ounce after climbing 2% Friday. It climbed 27% last month after gaining 8.6% in May and retreating 3.1% in April. Platinum lost 8.4% in 2024. The spot price is currently down $45.00 an ounce to $1379.90.
