Gold gains as Trump tariffs take effect, boosting safe-haven demand

Gold rose on Thursday as steep tariffs imposed by U.S. President Donald Trump took effect, boosting safe-haven demand and intensifying trade frictions.

Spot gold was up 0.4 percent at US$3,383.49 (HK$26,391.22) per ounce as of 0645 GMT. U.S. gold futures gained 0.6 percent to US$3,453.30.

"Trump has been dishing up fresh tariff threats which is keeping gold in the frame as a defensive play for investors," Tim Waterer, chief market analyst at KCM Trade said.

"Gold is moving towards the doorstep of the psychological US$3,400, with risk-assets being kept off-balance somewhat by the constant tariff proclamations by the U.S. president."

Trump's higher tariff rates of 10 percent to 50 percent on dozens of trading partners kicked in on Thursday, testing his strategy for shrinking U.S. trade deficits without massive disruptions to global supply chains, higher inflation and stiff retaliation from trading partners.

Trump also said the United States will impose a tariff of about 100 percent on imports of semiconductors but offered up a big exemption - it will not apply to companies that are manufacturing in the U.S. or have committed to do so.

Gold, traditionally considered a safe-haven asset during political and economic uncertainties, tends to thrive in a low-interest-rate environment.

Adding to gold's support, the dollar index hovered near a more than one-week low after surprisingly weak U.S. jobs data last week triggered bets for a U.S. rate cut in September.

Traders are now pricing in a 93 percent chance of a 25-basis-point rate cut next month, according to the CME Group's FedWatch Tool.

The Federal Reserve may need to cut rates in the near-term in response to a slowing U.S. economy, Minneapolis Fed President Neel Kashkari said.

Elsewhere, spot silver rose 0.6 percent to US$38.07 per ounce, platinum was up 0.5 percent to US$1,340.85 and palladium gained 2.4 percent to US$1,158.80.

REUTERS