Gold Moves Up As Dollar Faces Pressure from Global Trade War Fears

Spot gold (XAUUSD) was up 0.1% at $1,242.23 an ounce as of 0044 GMT. It fell about 1% to $1,239.20, its lowest since Dec. 12, on Monday. U.S. gold futures were 0.1% higher at $1,243.10 an ounce. The dollar index which measures the greenback against a basket of six major currencies is 0.2% lower at 94.864, after gaining about 0.4% the previous day. U.S. President Donald Trump warned the World Trade Organization on Monday that “we’ll be doing something” if the United States is not treated properly, just hours after the European Union said that U.S. automotive tariffs would hurt its own vehicle industry and prompt retaliation. The White House said on Monday that Canada’s decision to enact tariffs on C$16.6 billion ($12.63 billion) worth of American goods in retaliation for U.S. tariffs on imports of Canadian steel and aluminum would not help its economy.

The U.S. Chamber of Commerce on Monday denounced President Trump’s handling of global trade disputes, issuing a report that argued tariffs imposed by Washington and retaliation by its partners would boomerang badly on the American economy. This has caused an increase of pressure on US Greenback which helped precious metals gain some relief from downtrend movement. Investors have sharply increased their use of hedging strategies, signaling concerns that the intensifying trade battle between the United States and China might hit economies from Germany to South Korea. With trade war row between China and the US growing each day, Asian investor placed short bids on silver as dollar grows weaker and this has helped XAGUSD see some upward movement during Asian market hours.

Oil prices climbed on Tuesday after Libya declared force majeure on significant amounts of its supply, but rising overall output from OPEC as well as in the United States was dragging on markets. Brent crude oil futures were at $78.06 per barrel at 0112 GMT, up 1% from their last close. Similarly, U.S. West Texas Intermediate (WTI) crude futures were up 1% at $74.69. Traders said that disruptions to Libyan supplies were pushing up prices on Tuesday, outweighing a rise in June in supply from the Organization of the Petroleum Exporting Countries.