Renewed concerns about a potential trade war as a direct result of proposed tariffs on steel and aluminum has resulted in both a lower U.S. dollar as well as buyers accumulating gold. Gold futures are currently trading up $15.50 at $1335.40.
Last week President Donald Trump proposed the implementation of steel and aluminum tariffs. This proposal has met with global and internal resistance. Nonetheless, President Trump remains steadfast in his desire to initiate these tariffs.
Pushback on President Trump’s proposed tariffs internally are coming from both Republican lawmakers as well as his administration. This pressure is an attempt to limit tariffs with benchmarks and quotas.
According to Bloomberg Politics, “Republicans in Congress are undertaking an unusual public campaign to thwart broad tariffs of 25 percent on imported steel and 10 percent on aluminum. House Speaker Paul Ryan on Tuesday urged the president to ‘be more surgical’ in penalizing trade abuses to prevent ‘any kind of unintended consequences or collateral damage.’”
Global pressure and threats of retaliation are also emerging from global partners. A warning issued by the European Union today stated that it would respond with its own 25% tariff to hit 3.5 billion of U.S. goods. This would include targeting U.S. brands ranging from consumer, agricultural, and steel products.
According to a list drawn up by the European Commission, obtained by Bloomberg news, targeted U.S. goods include motorcycles, jeans, and bourbon whiskey. This sends a strong message to Washington underlining the potential economic costs if President Trump moves forward with his tariff proposal.
These renewed concerns have put pressure on the U.S. dollar which is currently trading down by over a half a percent (-0.47 points) at 89.57. Tariff fears have also prompted money flow into gold as a safe-haven asset, bidding up the precious yellow metal by about $15 today.
As of 4:00 PM Eastern standard time, spot gold is trading up $14 on the day and currently fixed at $1330.80. On closer inspection, according to the Kitco Gold Index, $8.20 of today’s move is directly attributable to buying, with the remaining $5.80 a result of the weakening U.S. dollar.
Wishing you as always, good trading,