Quick overview

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Gold saw a surge in demand on Thursday due to renewed interest in safe-haven assets following US President Donald Trump’s imposition of an additional 25% tariff on Indian imports, which escalated trade tensions.

Spot gold was up 0.3 percent at $3,378 oz. The price of US gold futures increased by 0.4 percent to $3,445.6.

 

The bullion asset was approaching the psychological $3400, with risk assets being somewhat off balance due to the US president’s constant tariff declarations. Citing New Delhi’s ongoing purchases of Russian oil, Trump imposed an additional 25% tariff on Indian goods imports on Wednesday, further escalating the trade rift between the two countries following a stalemate in negotiations.

The new import tax will increase duties on some Indian exports to as much as 50 percent, which is among the highest imposed on any US trading partner, and it will take effect 21 days after August 7.

Trump also stated that the United States would impose a tariff of approximately 100 percent on semiconductor imports, provided a significant exception: it would not apply to businesses that were already manufacturing in the United States or had promised to do so.

The dollar index hovered close to a more than one-week low, adding to gold’s support following last week’s unexpectedly weak US jobs data, which sparked bets for a US rate cut in September.

The CME Group’s FedWatch Tool indicated traders are currently pricing in a 95% likelihood of a 25-basis point rate cut next month. Minneapolis Fed President Neel Kashkari has indicated that the Federal Reserve may need to lower interest rates soon due to a slowing U.S. economy.