Tariff Negotiations Weigh Down on Gold
Gold () rose slightly on Friday as markets adjusted amid evolving trade headlines. However, it pulled back during the day as traders monitored negotiations with key U.S. trade partners, many aiming to finalise deals or secure more time ahead of approaching deadlines. U.S. Treasury Secretary Scott Bessent signalled that talks could extend beyond 9 July by as much as three weeks.
Progress on multiple trade deals and the possibility of extended tariff deadlines reduced gold’s safe-haven demand. Reduced urgency to hedge against trade-related volatility and optimism about resolving trade tensions are weighing on bullish gold positions. However, downward momentum remained limited amid ongoing geopolitical uncertainties.
U.S. President Donald Trump reiterated that nations failing to reach agreements by the deadline would face higher tariffs. He confirmed that reciprocal measures would commence on 1 August, which supports gold’s resilience. Investors awaited further clarity on U.S. fiscal policy as last week’s robust labour market data reduced expectations of a Federal Reserve rate cut in July, complicating the near-term outlook for gold.
Gold edged lower during the Asian and early European trading sessions, though lingering concerns over U.S. policy direction likely capped losses. As the Wednesday deadline for the 90-day pause on reciprocal tariffs approaches, President Trump said on Sunday that a dozen or more tariff-related letters could be issued this week. Thus, developments in trade tensions remain in focus and limit bearish pressure on the metal. Key levels to watch are support at $3,300 and resistance at $3,360.
Euro Awaits Trump’s Tariff Deadline
The euro () held steady on Friday as U.S. President Donald Trump’s tax-cut bill passed through the Senate and focus turned to countries working to secure trade agreements.
Last week, the euro rose to its highest level in over three years, supported by rising tariff risks, mounting fiscal concerns, and expectations that the Federal Reserve (Fed) might deliver more rate cuts. These factors fuelled investor uncertainty and drove demand for alternative currencies. Trump confirmed that reciprocal tariffs will take effect on 1 August. Treasury Secretary Scott Bessent announced that tariffs would remain at 2 April levels for countries that haven’t reached a trade agreement with the U.S., granting additional time to renegotiate terms. So far, only China, U.K., and Vietnam have secured partial deals, leaving other countries under pressure to finalise agreements.
Stronger-than-expected U.S. jobs data helped ease some concerns over the state of the U.S. economy. The data showed 147,000 jobs were added in June, surpassing forecasts and slightly improving from May’s figures. The data eased recession fears and reduced immediate pressure on the Fed to further. Meanwhile, the European Central Bank (ECB) is unlikely to strongly resist further euro appreciation, even as policymakers note concerns that the currency could surpass 1.2000, allowing currency markets to remain active in the near term.
EUR/USD fell during the Asian and early European trading sessions. Today, the main focus is on the eurozone’s report at 9:00 a.m. UTC. Also, traders should consider any new developments and events regarding U.S. trade tariff plans. Market volatility will likely remain elevated as political events, both domestic and international, create uncertainty.
Japan’s Real Wage Data Pressures JPY
The Japanese yen () weakened towards 145.000 on Monday, losing its gains from the previous session as weaker-than-expected wage data reduced market expectations for more Bank of Japan (BoJ) rate hikes. Nominal wages in May rose by just 1% year-on-year, falling short of market forecasts of 2.4% and marking the third consecutive month of slowing wage growth.
Real wages—an indicator of consumer purchasing power—declined by 2.9%, the sharpest drop in nearly two years, extending their streak of monthly declines to five. The broader wage data have yet to capture the record pay increases negotiated during this year’s spring labour talks, as many smaller, non-unionised firms have been slow to implement the higher wages.
Adding to the pressure on JPY, Prime Minister Shigeru Ishiba stated on Sunday that he would not ’easily compromise’ during trade negotiations with Washington, as Japan seeks to avoid U.S. tariffs of up to 35% on its exports. This firm stance in trade discussions has added to investor caution, weighing further on the yen against the U.S. dollar (USD).
“Market volatility appears inevitable when the pause officially ends and new tariff levels are announced”, James Kniveton, a senior corporate FX dealer at Convera, wrote in a note. At the same time, “the impact may prove more muted this time”, he said. “Unlike previous announcements where tariff levels exceeded expectations, current proposals are largely anticipated. Moreover, markets appear to be pricing in continued deadline extensions.”