Gold price rises due to new import tariffs Trump

The gold price rose above €1,300 per troy ounce this week, reaching its highest level since late 2012. The reason for the price increase is not the interest rate cut by the US central bank, but the announcement of new import tariffs by President Trump. The U.S. president announced on Twitter new import tariffs on €300 billion worth of Chinese goods, with which a possible trade agreement is off the table for the time being.

The breakdown of the trade negotiations created uncertainty in the financial markets. In the United States, the Dow Jones and the S&P 500 lost more than one percent on Thursday, while European stock markets fell about 2.5% on Friday. The Shanghai Composite and the CSI 300 closed on Friday at a loss of nearly 1.5%. After the announcement of the new import duties, the oil price even went up by 7% down, as investors anticipate weaker economic growth.

... during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country. This does not include the 250 Billion Dollars already Tariffed at 25%...

— Donald J. Trump (@realDonaldTrump) August 1, 2019

Gold price higher, palladium down

Gold benefited the most from a flight to safe havens. After Trump's statements, the gold price rose by almost 2% to $1,440 per troy ounce. Because the dollar became more valuable against the euro, the price movement in euros was even stronger. On Thursday evening, the Gold price to €1,303 per troy ounce, reaching its highest level since December 2012. Silver prices also shot up on Thursday, but were back at the same level as before Trump's tweet on Friday afternoon.

The prices of platinum and palladium on the other hand, went down this week. These precious metals are mainly used for industrial applications and thus become cheaper if the outlook for the economy worsens. Palladium, in particular, has fallen in price in recent days. At the beginning of this week, the price was still above €44,000 per kilo, but at the time of writing, a kilo costs less than €40,000. That's a price drop of more than ten percent. Palladium is mainly used in the automotive industry. This sector is very sensitive to changes in the economic outlook and therefore reacts strongly to the news.

Gold price to highest level since end of 2012

Price of palladium below €40,000 per kilo again