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Gold prices rose early on Monday, driven by safe-haven inflows amid concerns over global trade following President Donald Trump's threat to impose 30% tariffs on the European Union and Mexico.
The prices of the precious metal have rallied over 28% this year, outperforming major benchmarks on Wall Street, as Trump’s trade war has heightened concerns over a global economic slowdown.
Spot gold prices were up 0.4% at $3,370.11 per ounce, while gold futures advanced 0.5% at $3,380.50 per ounce at 8.14 a.m. GMT. Retail sentiment on Stocktwits for the SPDR Gold Shares ETF (GLD) remained in ‘bearish’ territory heading into Monday’s stock market open.
According to a Reuters report, OANDA senior market analyst Kelvin Wong said that the near-term outlook for gold appears positive, and if gold prices can close above $3,360 daily, they could advance higher towards the next resistance level at $3,435.
On Saturday, Trump threatened to impose 30% tariffs on the EU and Mexico after Aug. 1, following the failure to reach deals with two of the country’s most important trading partners. Mexico and the EU both criticized the tariffs as unfair and disruptive. However, Brussels still extended its pause on countermeasures to allow negotiations to continue.
Investors are also awaiting U.S. inflation data, due to be released Tuesday. According to CME’s FedWatch tool, a majority of traders expect the U.S. central bank to maintain its benchmark interest rates at present levels as policymakers seek more clarity on tariffs.
The U.S. dollar index also ticked marginally higher, which could cap gains in gold prices, as the bullion becomes more expensive for foreign currency holders if the U.S. dollar rises.
The SPDR Gold Shares ETF has gained over 26%, compared with 5.8% gains of the SPDR S&P 500 ETF.
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