Gold Jumps as Trump Announces Tariffs on Mexico and Canada
Gold prices rose following the announcement by US President Donald Trump that tariffs would likely be imposed on Mexico and Canada early in June.
Market Implications
Traders are assessing the potential impact of tariffs as high as 25% on the US's neighbors. Such a move could trigger a trade war, potentially impacting gold prices. Trump also hinted at considering a universal tariff on imports but stated he was not yet ready for that step.
Silver's Surge
After Trump's comments, silver futures initially spiked, with contracts for March delivery rising 1.2% to $31.525 an ounce. Mexico is a significant silver producer, and it remains unclear how tariffs would affect metal imports.
Bullish Sentiment for Gold
Analysts believe Trump's tariff plans and the resultant equity market volatility could fuel bullish momentum in gold. Gold's value may also be supported by potential inflationary pressures arising from Trump's domestic agenda of tax cuts and increased spending.
Haven Asset Demand
Concerns about the new president's immigration policies and the potential for strained US relations with other countries could drive demand for gold as a haven asset.
Spot Gold and Currency Movements
At 7:27 a.m. London time, spot gold was trading around $2,727.10 an ounce, up 0.7% from Monday's close. The Bloomberg Dollar Spot Index increased by 0.4%. Palladium and platinum prices fell, while silver remained steady.