Gold Price Slips on Tariff Hopes but Yellow Metal Remains a Safe Haven

Investors retreated from the safe haven of gold today as President Trump eased his tariff threats on Europe.

The gold price slipped 1% in early trading to around $3,329, although it began to pare back some of those losses later in the day.

EU Tariffs

That drop was largely down to Trump delaying his move to impose 50% tariffs on goods imported from the European Union from June 1 to July 9. The hope is that the U.S. and the EU will be able to continue discussions over a potential trade deal which will lead to a lower tariff rate being imposed.

The modest fall may also have been due to the closure of both the U.S. stock markets for Memorial Day and the U.K. for a Spring Bank Holiday.

The gold price could have fallen further but, as ever, geopolitical concerns weren’t hard to find with a potential cooling in relations between the U.S. and Russia given the latter’s continued attacks in Ukraine. The ongoing crisis in the Middle East also kept gold looking shiny.

Golden Trumpet

However, it showed once again how the direction of the gold price is now so linked to Trump’s announcements.

Gold prices had their best week in six weeks last week, after Trump renewed those tariff threats on EU goods and said he was considering a 25% tariff on any Apple (AAPL) iPhones that are sold in the U.S. but not made there.

Indeed, the price is expected to continue its upward trend over the next few weeks.

“We still look for higher prices over the coming months, expecting the yellow metal to retest the level of $3,500/oz,” said Giovanni Staunovo, UBS analyst.

Citigroup (C) at the weekend upgraded its zero-to-three month price target for gold back to $3,500 – from $3,150 on May 12 – amid U.S. tariff policies, geopolitical risks and concerns around the U.S. budget.

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