Background: Understanding the Relevance of Donald Trump
Donald Trump, the President of the United States, has been a significant figure in recent global economic discussions. His policies and statements have direct implications for international trade, taxation, and currency valuation. In this article, we focus on how Trump’s actions regarding trade negotiations and tax reform have influenced the gold market.
Gold Prices Gain on Weak Dollar and Safe-Haven Demand
Spot gold: The price of gold closed the week at $3,334.47 per ounce, having gained approximately 1.9% throughout the week.
Gold futures in the U.S.: These added 0.1% to close at $3,344.7 per ounce.
The week’s gains were fueled by a weakening U.S. dollar and increased demand for safe-haven assets due to the approaching July 9 deadline set by Trump for trade agreements.
Safe-Haven Demand and Fiscal Concerns
Ricardo Evangelista of ActivTrades explained, “Anxiety over the U.S. fiscal situation (following the approval of Trump’s broad tax-cut bill in Congress) and persistent uncertainty surrounding the July 9 deadline for tariffs have driven demand for safe-haven assets.”
Trump’s Trade Policy Shifts
Trump announced that the U.S. would start sending letters to countries on July 2, signaling a change from previous plans for individual trade agreements. Earlier, on April 2, Trump had announced reciprocal tariffs ranging from 10-50%, later reducing most to 10% until July 9 to allow for negotiations.
Tax Reform Legislation
Trump’s tax-cut legislation overcame its final hurdle in Congress on the previous day, making the 2017 tax cuts permanent, funding his immigration crackdown, and adding new tax breaks promised during the 2024 campaign.
Mixed Employment Data
While the U.S. job growth was unexpectedly strong in June, nearly half of the payroll increase came from the government sector. Private-sector advances were the smallest in eight months, as businesses grappled with headwinds against the growing economic challenges.
Other Precious Metals Performance
- Silver: Spot silver decreased by 0.1% to $36.78 per ounce.
- Palladium: It fell by 0.3% to $1,133.21.
- Platinum: Platinum rose by 0.5% to $1,374.21, marking its fifth consecutive week of gains.
Copper Prices Fall Amidst Trade Uncertainty
Copper prices declined as market participants focused on the July 9 deadline imposed by Trump for generalized tariffs to take effect against countries yet to sign trade agreements.
Copper Reference Prices
The copper benchmark on the London Metal Exchange (LME) dropped 0.9% to $9,866.5 per tonne after reaching a three-month high of $10,020.5 earlier in the week. Weekly gains amounted to 0.65%.
Moderate Trading Volumes
Trading volumes were moderate due to the July 4 Independence Day holiday in the U.S., according to market operators.
Dollar Strength and Metal Industries
The weak dollar supported industrial metals. However, traders noted that growing expectations for the Federal Reserve to maintain interest rates following the robust employment report on Thursday could bolster the U.S. dollar and dampen metal demand.
