Gold prices pull back as Trump postpones EU tariffs

Investing.com-- Gold prices fell slightly in Asian trade on Monday, giving back some of last week’s gains after U.S. President Donald Trump over the weekend reneged on his threat to immediately impose 50% tariffs on the European Union.

But losses in gold were limited by persistent weakness in the dollar and a steady sell-down in Treasuries, as markets remained on edge over the U.S.’ deteriorating fiscal health and rising debt levels. 

Risk sentiment was also rattled by Minneapolis Federal Reserve President Neel Kashkari warning that the tariff shock was likely to be stagflationary, keeping safe haven demand in play. 

Spot gold fell 0.2% to $3,349.45 an ounce, while gold futures for June fell 0.5% to $3,376.91/oz by 00:54 ET (04:54 GMT). 

Trump postpones 50% tariffs against EU 

Trump said on Sunday evening that he had agreed to postpone his recently proposed 50% tariffs on the European Union to early-July, citing positive dialogue with EU head Ursula Von Der Leyen. 

The move comes after Trump on Friday threatened to impose 50% tariffs on the EU from early-June, citing a lack of progress in trade negotiations. 

While Trump’s Sunday announcement did offer some relief to risk-driven markets, hurting safe haven demand for gold, traders were seen remaining uncertain over the U.S. President’s policies. 

Sunday’s announcement also represented another instance of Trump flip-flopping on his tariff threats, a trend that has sparked wild swings in markets this year.

Trump’s July 9 deadline also applies to plans for sweeping tariffs against major U.S. trading partners, who are now racing to reach trade deals with Washington.

Trump on Friday also threatened to tariff smartphone imports to the U.S., keeping investors cautious.

Uncertainty over Trump’s trade policy drove strong gains in gold this year, with the yellow metal hitting a record high of $3,500/oz earlier this month. 

Metal prices buoyed by dollar weakness; Fed’s Kashkari flags stagflation risk

Broader metal prices advanced against a softer dollar, especially as the Fed’s Kashkari warned of stagflationary risks from Trump’s tariffs. Kashkari also said the Fed was unlikely to alter rates by September, amid heightened economic uncertainty. 

The dollar fell 0.3% in Asian trade, although greenback volumes are expected to be limited by a U.S. and UK holiday on Monday.

The dollar was also nursing steep losses in recent weeks, which stemmed from heightened concerns over U.S. fiscal health. Kashkari’s warning added to this uncertainty. 

Platinum futures rose 0.7% to $1,095.90/oz, while silver futures rose 0.3% to $33.690/oz.