[BENGALURU] Gold prices steadied on Tuesday (Jul 8) as US President Donald Trump announced sharply higher tariffs on goods from Japan, South Korea and other nations, while higher US treasury yields capped gains.
Spot gold fell 0.1 per cent to US$3,331.89 per ounce as at 0035 GMT. US gold futures were steady at US$3,341.80.
On Monday, Trump began telling trade partners, including Japan and South Korea, that sharply higher US tariffs would start on Aug 1, marking a new phase in the trade war he launched earlier this year.
The Aug 1 effective date for US tariffs was firm, Trump emphasised but added he was open to extensions if countries made proposals.
“Reciprocal tariffs” were capped at 10 per cent until Jul 9 to allow for negotiations, but only agreements with Britain and Vietnam have been reached so far.
The yield on benchmark US 10-year notes hovered near a two-week high, while the US dollar index shed 0.1 per cent.
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A higher yield increases the opportunity cost of holding non-yielding bullion, while a weaker US dollar makes it more affordable for holders of other currencies.
The Trump administration will not immediately impose a new 10 per cent tariff against members of the developing nation Brics bloc but will proceed if countries take so-called “anti-American” policy actions, according to a source familiar with the matter.
Trump’s tariff policies have stoked inflation fears, further complicating the Federal Reserve’s path to lower interest rates. The minutes of its June meeting, expected on Wednesday, should offer more clues into its policy outlook.
A paper published jointly by the San Francisco and New York Federal Reserve banks suggests the possibility of the Fed cutting its short-term rate target to near-zero levels in the coming years despite current relatively high borrowing costs.
Spot silver lost 0.5 per cent to US$36.74 per ounce, platinum shed 1.5 per cent to US$1,370.46 and palladium fell 2.1 per cent to US$1,170.46. REUTERS
