US President Donald Trump said that gold imports would not be subject to US tariffs, causing the price of gold to fall. Although traders are still waiting for a formal clarification of the policy after a federal government ruling last week plunged the entire market into chaos and confusion.
When the Asian market opened, the spot gold price remained around $3,350 per ounce. Previously, Trump posted on social media, “Gold will not be subject to tariffs!” After that, the gold price dropped by 1.6% on Monday. New York gold futures also dropped by approximately 2.5%.
Traders were taken by surprise when the U.S. Customs and Border Protection decided to impose tariffs on imported products last week. This shock caused the futures price on the New York Mercantile Exchange (COMEX) to soar by more than $100 on Friday, outperforming the benchmark spot price in London by $100. Since then, the spread has narrowed to about 50 US dollars.
Washington’s decision on gold tariffs will have a profound impact on global gold circulation and may affect the smooth operation of US gold futures contracts. The US government lifted the gold tariff in April. Traders said that the precious metals market will remain tight until the long-term situation becomes clear.
Since the beginning of this year, the price of gold has risen by more than a quarter, with the majority of the increase occurring in the first four months. Geopolitical and trade tensions have stimulated safe-haven demand, coupled with strong purchases by central banks, supporting gold prices.
In other respects, the US dollar rose on Monday and a key US inflation report will be released later on Tuesday, which may provide clues about the direction of the Federal Reserve’s monetary policy. Rising interest rates are bad for interest-free gold, while a stronger US dollar often makes gold priced in US dollars more expensive for most buyers.
Investors are also weighing the move announced by Trump on Monday to extend the tariff truce on Chinese goods by 90 days until early November. This move should be able to ease people’s concerns about the recurrence of a trade war, thereby reducing the demand for safe-haven assets.
On tade issues, Trump has extended the suspension of imposing high tariffs on Chinese goods until November 10 to stabilize trade relations between the world’s two largest economies. The additional tariffs were originally scheduled to be imposed on Tuesday.
Seb Mullins, head of multi-asset and fixed income at Schroders Australia, said: “At present, the market is pleased with the progress made in the negotiations to extend the August 12 deadline, but this is by no means a certainty and no agreement has been signed yet.” The trade agreement with China is most likely to have another conflict, which will have the greatest impact on the total amount of US tariffs.
Later on Tuesday, people’s attention will turn to inflation data, which is expected to show that the inflation rate for US consumers will slightly rebound as retailers gradually raise the prices of various goods affected by the increase in import tariffs.
Chris Larkin of Morgan Stanley E*Trade said, “The market’s reaction to any unexpected data could be exaggerated – especially if the CPI data is significantly higher than expected, leading traders to believe that the Federal Reserve may not cut interest rates at the next meeting.”
According to the median forecast of a Bloomberg survey of economists, the core consumer price index (CPI) in the United States is expected to rise by 0.3% in July. This index is regarded as an indicator of potential inflation because it excludes the more volatile costs of food and energy.
The money market indicates that traders have factored in expectations that the Federal Reserve will cut interest rates more than twice before December, and the probability of a 25 basis point rate cut by the Fed next month is approximately 90%. The latest employment report also shows that the labor market has cooled sharply in the past few months.
Technical analysis
Wechat’s functions are restricted from time to time. Students who want to try the plugin, please be sure to do it several times!!
Gold: In our plugin yesterday, we reminded that the price around 3350 and 3360 would undergo a liquidity sweep. Unfortunately, after the liquidity sweep, the price did not trigger a significant rebound. Today, we focus on the key dividing line between bulls and bears around 3360/65. Only when it is recaptured will we consider catching the bullish signal. At the same time, it is necessary to pay attention to the potential fluctuations brought by the CPI data in the evening, which may once again push down the lower point of the phased correction. For detailed locations, please consult the plugin.
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note the message 666
Nasdaq: Yesterday, we clearly stated in our article that we should participate in the Nasdaq’s pullback. If conditions permit, we should participate 1-2 times. The pullback sell we gave in the blue area after the break was swept by a dent, but after the liquidity was cleared, the price still dropped significantly. Our forecast for the price within the day remains volatile. The operation policy is to mainly capture short signals after the fluctuation. For detailed locations, please consult the plugin.
(Nasdaq 15-minute chart
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note the message 666
Crude oil: As the US-Russia negotiations are approaching, we continue to guard against a potential decline in crude oil prices. But after the decline, we first try to catch the bullish signals after the market stabilizes. For detailed locations, please consult the plugin.
(Crude oil 15-minute chart
The plugin is updated from 12:00 to 13:00 every trading day. If you want to experience the same plugin as shown in the picture, please contact V: Hana-fgfg and note the message 666
Key financial data and events to focus on today:
The ILO unemployment rate in the UK for the three months up to June at 14:00
Germany’s ZEW Economic Sentiment Index for August is released at 17:00
20:30 US July unadjusted core Consumer Price Index (annual rate)
