Gold prices rallied by nearly one per cent on Friday, as global market sentiment soured in response to US President Donald Trump’s increasingly controversial trade policies, which now include new tariffs on Canada and threats to broaden duties to other countries and commodities like copper. The yellow metal, a traditional safe haven, benefited from the heightened uncertainty, despite a strong performance by the US Dollar. This saw the XAU/USD trade at $3,354, having bounced off daily lows of $3,322.
On Thursday, President Trump unveiled 35 per cent tariffs on Canadian goods, albeit with maintained exemptions for products adhering to the USMCA trade deal signed in 2020. More broadly, he reiterated plans to impose blanket tariffs of 15 per cent to 20 per cent on most trading partners, a move that could disrupt global trade flows. These latest threats follow earlier announcements of 50 per cent duties on copper imports and Brazilian products.
The economic calendar in the US remained sparse, but comments from Federal Reserve officials offered insights into the central bank’s cautious stance. Chicago Fed President Austan Goolsbee stated that he does not understand arguments advocating for Fed rate cuts to reduce government debt servicing costs, reiterating the Fed’s dual mandate of jobs and price stability.
Goolsbee also noted that while hard data on the economy was looking solid before the April 2 Liberation Day tariffs, there has since been potential disruption and ambiguity that the Fed needs to resolve.
Looking into the new week, the US economic docket will be closely watched. Key releases include the Consumer Price Index (CPI) for June, with figures expected to show a rise to 2.6 per cent year-on-year (up from 2.4% in May) and 0.3 per cent month-on-month (up from 0.1%). Core CPI is projected to increase by 2.8 per cent YoY, unchanged from May, and 0.3 per cent MoM, up from 0.1 per cent. Further data includes Retail Sales for June, foreseen to remain unchanged at zero per cent after May’s -0.9 per cent plunge, and Initial Jobless Claims for the week ending July 12, projected to drop slightly from 227,000 to 225,000. A flurry of Federal Reserve speakers are also scheduled before the blackout period commences on July 19, offering further clues on monetary policy direction. Gold’s rally on Friday was a direct beneficiary of the escalating trade war, even as the US Dollar maintained a solid performance for the week. The US Dollar Index (DXY) printed gains of over 0.87 per cent, marking its best weekly performance since February 2025.
Data from the Chicago Board of Trade indicates that market players are now eyeing 49 basis points (bps) of easing in 2025, a slight recalibration of earlier expectations for Fed rate cuts.
From a technical perspective, gold’s uptrend has resumed, with the yellow metal rising above the $3,350 mark, which has opened the door for further upside. The Relative Strength Index (RSI) has recently turned bullish, hinting that buyers are gathering traction.