Safe-haven Gold Rises on Trump Tariff Worries

Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/FILE PHOTO
Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/FILE PHOTO
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Safe-haven Gold Rises on Trump Tariff Worries

Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/FILE PHOTO
Ingots of 99.99 percent pure gold are placed in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/FILE PHOTO

Gold prices rose on Thursday as investors worried about potential import tariffs from US President Donald Trump, while investors awaited a key inflation report to gauge the Federal Reserve's policy path.

Spot gold was up 0.7% at $2,777.55 per ounce, as of 1227 GMT. US gold futures climbed 0.9% to $2,794.

"Despite the fact that tariffs on gold in the States are extremely unlikely given that it is a reserve asset, risk managers are taking no chances and moving metal into the States," said StoneX analyst Rhona O'Connell, Reuters reported.

"The element that is most affected by this is the exchange of futures for physical (EFP), but it is undoubtedly contributing to support in spot."

London bullion market players are racing to borrow gold from central banks, which store bullion in London, following a surge in gold deliveries to the US, two sources familiar with the matter said.

Even though Trump did not mention gold in his tariff plans, traders were worried about possible risks, leading to more gold being sent to New York.

Earlier this week, the White House said Trump plans to hit Mexico and Canada with steep tariffs on Saturday while also considering some on China.

Meanwhile, the Fed held interest rates steady on Wednesday. Chair Jerome Powell said there would be no rush to cut them again.

Investors now await the December US personal consumption expenditures (PCE) price index report on Friday.

Spot silver was up 0.7% at $31.02 per ounce.

Silver, meanwhile, is seeing renewed strength relative to gold after the gold-silver ratio once again got rejected above 91, said Ole Hansen, head of commodity strategy at Saxo Bank.

"Market is pricing in a higher risk of silver import tariffs compared to gold."

Platinum added 1.4% to $959.73, and palladium gained 2% to $981.51.



EU Sees €28 Billion Hit from Trump’s Steel, Aluminum Tariffs

FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa
FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa
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EU Sees €28 Billion Hit from Trump’s Steel, Aluminum Tariffs

FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa
FILED - 12 July 2020, Lower Saxony, Salzgitter: An employee walks along coiled steel at Salzgitter AG. Photo: Julian Stratenschulte/dpa

The European Union estimates that the first wave of Donald Trump’s steel and aluminum tariffs will hit as much as €28 billion ($29.3 billion) of the bloc’s exports in what would be a massive escalation in the US president’s trade war, Bloomberg reported.

The amount of goods — which the EU assesses will include derivative products as well — would be about four times larger than the last time Trump targeted the bloc’s metals sector, according to people familiar with the EU’s thinking.

EU trade chief Maros Sefcovic debriefed the bloc’s ambassadors on Friday after his visit to Washington to meet with his US counterparts. He cautioned that the situation is in flux and the details and the scope of any tariffs could still change, said the people, who spoke on the condition of anonymity.

As part of his effort to rewrite global trade rules, Trump announced a series of duties including 25% tariffs on steel and aluminum exports that could take effect as soon as March 12. He’s also announced reciprocal tariffs based on policies of partners that are seen as obstacles to US trade.

The European Commission, which has authority over EU trade actions, declined to comment.

For the EU, the fight over American metals tariffs started in 2018 during Trump’s first term, when the US hit nearly $7 billion of European steel and aluminum exports with duties, citing national security concerns. At the time, officials in Brussels scoffed at the notion that the EU posed such a threat.

In that first salvo, the US hit steel goods with 25% tariffs and aluminum with 10%, and included exemptions for certain products. Bloomberg reported earlier that this time around, no exemptions were planned.

The 27-nation bloc retaliated by targeting politically sensitive companies with retaliatory duties, including Harley-Davidson Inc. motorcycles and Levi Strauss & Co. jeans. The measures were applied product-by-product and included agricultural goods and apparel in addition to steel and aluminum products.

The two sides agreed to a temporary truce in 2021, when the US partly removed its measures and introduced a set of tariff-rate quotas above which duties on the metals are applied, while the EU froze all of its restrictive measures.

The EU has said that it would respond quickly and proportionally to US tariffs and could reactivate as a first step the lists previously suspended. The commission has been preparing various lists with different sectors and goods targeted with the principle of causing more harm on the American side, including in sensitive constituencies, Bloomberg previously reported.

The commission has said that unfreezing the suspended tariffs, which are on pause until the end of March, could be done quickly.

Sefcovic, who met with US Commerce Secretary Howard Lutnick, Jamieson Greer, his pick for US trade representative and National Economic Council Director Kevin Hassett this past week, told EU envoys that the atmosphere was positive but no negotiations were conducted yet, said the people.

According to Bloomberg, Sefcovic said he used the meeting as a first point of contact to open the channels of communication and to try to debunk claims by the Americans that he said were false, including that Europe’s value added tax is unfair to the US, they said.

In order to avoid a trade clash, Sefcovic offered to his American counterparts a deal to lower tariffs on industrial goods, including cars, one of Trump’s longstanding demands.