Gold hits three-week high as Trump widens trade war

Gold prices touched a three-week high on Monday, supported by safe-haven demand after U.S. President Donald Trump threatened to impose a 30% tariff on imports from the European Union and Mexico.

FUNDAMENTALS

* Spot gold was up 0.5% to $3,371.34 per ounce, as of 0045 GMT, its highest since June 23. U.S. gold futures climbed 0.7% at $3,386.20.

* Trump on Saturday threatened to impose a 30% tariff on imports from Mexico and the European Union starting on August 1, after weeks of negotiations with the major U.S. trading partners failed to reach a comprehensive trade deal.

* Both the European Union and Mexico described the tariffs unfair and disruptive, while the E.U. said it would extend its suspension of countermeasures to U.S. tariffs until early August and continue to press for a negotiated settlement. * Investors now await the U.S. inflation data for June due on Tuesday for more cues on the Federal Reserve’s interest rate path. Markets are currently pricing in just over 50 basis points worth of Fed easing by December.
* Chicago Fed Bank President Austan Goolsbee said the new tariffs unveiled by Trump could spark fresh concerns about inflation, which might force the Fed to maintain its wait-and-see posture, the Wall Street Journal reported on Friday.
* Gold, often considered as a safe-haven asset during economic uncertainties, tends to do well in a low-interest-rate environment.
* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.12% to 947.64 metric tons on Friday from 948.80 tons on Thursday.

* Meanwhile, gold speculators cut net long positions by 1,855 contracts to 134,842 in the week to July 8. * Spot silver gained 0.4% at $38.49 per ounce, platinum fell 1.1% to $1,384 and palladium slipped 1.7% to $1,194.40. DATA/EVENTS (GMT) 0430 Japan, Tertiary Ind Act NSA May China, Imports, Exports YY June China, Trade Balance USD June.