Quick overview

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The bullion metal reached its highest level in two weeks as investors flocked to the safe-haven metal following US President Donald Trump’s latest round of tariffs that escalated the global trade war.

Spot gold rose as much as 1.2 percent to $3,369 an ounce in the early trading hours before leveling off at about $3,350.

US gold futures increased to $3,381 per ounce. Global stocks plummeted as Trump intensified his imposition of a 35 percent tariff on Canada and announced plans to impose 15 or 20 percent tariffs on most other trading partners. A 50% tariff on copper imports was also announced by the US President earlier this week, causing the price of the industrial metal to hit a record high.

The market is experiencing a return of the uncertainty premium, and gold is receiving a safe-haven bid.

The likelihood of a US rate cut later this month, as mentioned by Federal Reserve Governor Christopher Waller, is another factor supporting bullion, as it could lead to a reduced interest rate.

The main drivers behind metals’ recent price increases remain in place, and more positive trends may develop in the second half. Notably, the potential for lower US interest rates could boost demand by lowering the opportunity cost of holding non-yielding assets like precious metals compared to short-term government bonds, especially for metal-backed ETFs.