Markets show easing tension with the signing of the U.S.-Japan trade deal, causing gold prices to dip; Comex copper prices reach unprecedented peaks.
In a recent development, gold and silver soared amid a dollar selloff, but gold retraced slightly and held near historic levels following the announcement of a U.S.-Japan trade deal. The agreement, which reduced the threatened auto tariffs on Japanese exports from 25% to 15%, has led to a modest decline in gold prices and related ETFs.
The U.S.-Japan trade deal has primarily resulted in a reduction of safe-haven demand for gold, as improved geopolitical and trade sentiment has diminished the immediate need for gold as a hedge against uncertainty. Key points from the recent developments show that gold prices declined about 0.3%, with spot gold falling to roughly $3,421 per ounce.
However, gold remains close to record highs due to persistent macroeconomic uncertainty, ongoing geopolitical risks, and expectations about Federal Reserve monetary policy. Political instability in Japan after the deal announcement introduced some volatility, showing that while the trade agreement reduces uncertainty, other factors still influence gold’s mixed price movement.
ETFs that track gold bullion, such as GLD, IAU, GLDM, PHYS, AAAU, and SGOL, likely reflect the slight pullback in spot gold prices but continue to exhibit strong underlying demand due to the broader uncertainties. Equity-type gold ETFs like GDX (gold miners) and GDXJ (junior miners) may be somewhat more sensitive to shifts in risk sentiment tied to trade stability and economic investment outlooks.
Potential resolution or lack thereof in U.S.-EU trade talks will be a key future driver for gold and these ETFs, as the continued uncertainty around U.S.-EU tariffs maintains a supportive backdrop for gold as a hedge against trade war risks.
Despite the retreat, the U.S.-Japan trade deal signals some progress in broader trade talks ahead of the August 1 implementation of U.S. tariffs. The market continues to watch upcoming U.S.-China trade negotiations and the U.S. Federal Reserve's outlook for monetary policy.
Gold remains up nearly 30% YTD due to persistent global trade tensions and geopolitical conflicts, despite the recent trade deals and potential trade agreements. The market is also following the potential impact of these deals on global trade tensions and gold prices.
Sources: [1] Reuters [2] CNBC [3] Bloomberg [4] Financial Times
- The U.S.-Japan trade deal has diminished the immediate need for gold as a safe-haven asset, leading to a modest decline in gold prices and related ETFs.
- ETFs that track gold bullion, such as GLD, IAU, GLDM, PHYS, AAAU, and SGOL, continue to exhibit strong underlying demand due to broader uncertainties, despite a slight pullback in spot gold prices.
- Equity-type gold ETFs like GDX (gold miners) and GDXJ (junior miners) may be more sensitive to shifts in risk sentiment tied to trade stability and economic investment outlooks.
- The potential resolution or lack thereof in U.S.-EU trade talks will be a key future driver for gold and these ETFs, as the continued uncertainty around U.S.-EU tariffs maintains a supportive backdrop for gold as a hedge against trade war risks.
- Gold remains up nearly 30% YTD due to persistent global trade tensions and geopolitical conflicts, with the market following the potential impact of trade deals on global trade tensions and gold prices.
