Gold prices have increased after a three-week period of gains, driven by uncertainty surrounding US trade policy which has unsettled markets and weakened the US dollar. Bullion was up 2.3 per cent to $US5224.42 an ounce at 3.20pm in New York. US President Donald Trump stated on Saturday his intention to impose a global tariff of 15 per cent after the Supreme Court’s ruling against his use of emergency powers to impose duties. A weaker US dollar has made gold cheaper for international buyers, further contributing to the price increase.
The court decision may impact the US deficit, as tariff revenues are now under threat, along with the country’s trade balance. The 15 per cent tariff proposed by the White House is intended to replace the invalidated tariffs, but it is only permitted to last up to 150 days and can only be applied in cases of fundamental international payments problems.
Gold’s recent gains have helped it recover from a sharp decline earlier in the month, which had significantly lowered prices. The recovery has been supported by long-term factors beneficial to the commodity, including heightened geopolitical tensions and investor concerns about sovereign bonds and currencies.
According to Vasu Menon, a strategist at Oversea-Chinese Banking Corp, there are enough structural factors in favour of gold in the medium term. However, Menon also suggests that gold prices may be volatile in the short term, following recent gains and ongoing developments with US trade policy and the situation in Iran.
