Tariff-Related Inflation Risks Support Gold
Gold () rose by over 0.35% on Wednesday.
Markets remain focused on tariff demand letters from US President Donald Trump, with Brazil the latest country to face steep duties on and other imports. The tariffs have fuelled concerns about broader trade disruptions and potential impacts on global supply chains.
Meanwhile, minutes from the Federal Reserve’s (Fed) June meeting revealed disagreements among officials about the timing and extent of potential . While most anticipated some easing later this year, views ranged from supporting a reduction as early as July to favouring no cuts until year-end. The Fed maintained a cautious, data-driven stance amid mixed economic signals. Officials highlighted tariff-related inflation risks, slowing consumer spending, and a still-strong labour market as key factors shaping their policy outlook in the months ahead.
Gold rose to around $3,320 during today’s Asian and early European trading sessions. XAU/USD extended gains from the previous session as investors monitored trade developments and digested the latest . A weaker US dollar also supports the precious metal, attracting safe-haven flows amid ongoing market uncertainty.
Weakening US Dollar Supports Euro
The euro () rose to around 1.17500 on Thursday as investors moved into riskier assets amid a broad rally in equities and commodities.
Easing trade tensions and resilient corporate earnings have reduced demand for the (USD) as a safe-haven asset, supporting other currencies. US Treasury yields also moved lower following robust demand in Wednesday’s 10-year note auction, further pressuring the greenback. The decline in yields reflects market expectations of potential policy easing and increased appetite for US debt, highlighting investor positioning ahead of upcoming economic data releases.
On the monetary policy front, minutes from the Federal Reserve’s June meeting signalled that most officials are open to considering interest rate cuts later this year if economic conditions warrant support. The Fed maintained its data-dependent approach, carefully weighing slowing consumer activity and inflation risks linked to ongoing trade uncertainties.
EUR/USD continued to rise during Asian and early European trading sessions. Markets now focus on potential trade negotiations with India and the EU, which could shape near-term currency moves and risk sentiment. Today, the US report at 12:30 p.m. UTC may cause volatility across all USD pairs. Stronger-than-expected figures could delay rate cuts and push EUR/USD below 1.17000. Conversely, weaker-than-expected results could weigh on the US dollar and lift EUR/USD above 1.18000.
US–Japan Trade Talks Stall
fell by 0.17% on Wednesday after the US–Japan trade talks stalled, with key disagreements centring on Japan’s protection of its domestic rice market.
US President Donald Trump recently imposed a 25% tariff on Japanese goods, effective 1 August. He explicitly ruled out any extension to the deadline, signalling a hard-line stance in negotiations. Japanese Prime Minister Shigeru Ishiba described the stance as ’truly regrettable’ but emphasised Japan’s commitment to dialogue in pursuit of a mutually beneficial agreement.
A local think tank projected that new tariffs could reduce Japan’s gross domestic product growth rate by 0.8% in 2025 and by 1.9% cumulatively through 2029. This underlines the potential long-term economic impact of the trade dispute.
The Japanese yen strengthened to around 146.000 on Thursday, extending gains from the previous session as the US dollar retreated amid a sharp decline in Treasury yields. The move reflects a broader shift in investor sentiment, with markets reducing positions in the greenback and seeking the relative safety of the yen amid global uncertainty.