DB Investing

Category: Commodities & Market Sentiment

  • Gold Steady, Oil Falls Amid Trump Tariff Shock

    Gold Steady, Oil Falls Amid Trump Tariff Shock

    Rising Dollar, Trade Tensions Shape Market Outlook

    Gold Prices Hold Steady Amid Trump’s Tariff Threats
    Gold prices remained stable in Asian trading on Tuesday after U.S. President Donald Trump’s tariff threats prompted some demand for safe-haven assets. However, a recovering dollar limited gains in metal markets.

    The dollar strengthened following Trump’s tariff announcement, with expectations of stable U.S. interest rates in the short term supporting the greenback. The stronger dollar, in turn, weighed on metal prices.

    The greenback has largely maintained its recovery from recent three-year lows, supported by strong U.S. economic data that has reduced bets on a Fed rate cut. Trump’s tariff threats also triggered demand for the dollar, as fears of inflation rise.

    Trump told reporters Monday that he is not “100% firm” on the August 1 deadline and that his administration is open to further trade talks.

    These remarks, along with a recent extension of the July 9 deadline, led some to believe Trump may not fully follow through with the tariff hikes, slightly boosting market risk appetite. Asian stocks rose Tuesday, reversing early Wall Street futures losses.

    Trump Announces Tariff Hikes on 14 Nations
    Despite that optimism, Trump later released a series of messages announcing high tariffs on many Asian and African countries. These include:

    • 25% on South Korea, Japan, Malaysia, and Kazakhstan
    • 30% on South Africa
    • 32% on Indonesia
    • 35% on Bangladesh
    • 36% on Thailand

    This renewed tension dented risk appetite and pushed Wall Street into sharp losses, while also supporting gold prices.

    Gold Holds Near Record Highs
    Gold has remained in a narrow trading range in recent weeks. The overall safe-haven demand due to Trump’s tariffs was limited, while strong U.S. data lowered the chance of imminent rate cuts. Yet, gold prices hovered close to their record high of $3,500 reached earlier this year.

    Oil Prices Fall on Tariff Concerns and OPEC+ Supply
    Oil prices dropped in Asian trading as markets assessed the impact of Trump’s planned tariffs on major trade partners. Additional pressure came from concerns about a global oversupply due to increased OPEC+ output.

    Trump’s Monday announcement warned 14 nations of sharply higher tariffs by August 1. The list includes major U.S. energy trade partners like Japan and South Korea, along with smaller exporters such as Serbia, Thailand, and Tunisia.

    Letters outlined:

    • 25% tariffs on all goods from Japan and South Korea
    • Up to 40% tariffs on other countries

    While Trump signed an executive order to extend the deadline from July 9 to August 1, he said the date is “firm but not 100% firm,” suggesting some room for negotiation.

    High tariffs on energy importers like Japan, South Korea, and India could disrupt trade flows and harm industrial output.

    Australian Central Bank Holds Rates Steady Amid Global Uncertainty
    The Reserve Bank of Australia (RBA) held its benchmark interest rate steady at 3.85%, surprising markets that expected a 25bps cut to 3.60%. The vote was split 6-3 in favor of maintaining rates.

    The RBA cited a need for more clarity on inflation trends and raised concerns over international economic headwinds, particularly the uncertain scope of U.S. tariffs.

    While Australian inflation has declined significantly since its 2022 peak, recent CPI data came in slightly stronger than expected, raising caution among policymakers.

    Markets had broadly expected a rate cut — the third this year — following February’s easing cycle start. Slowing growth, cooling inflation, and global tariff risks had all pressured the RBA to loosen policy.

    Still, the RBA warned of uncertain U.S. trade policy and noted that signs of slowing domestic demand and spending are appearing. However, Australia’s labor market remains tight.

    Conclusion

    The global markets are navigating a turbulent landscape shaped by Trump’s aggressive trade moves, a resilient U.S. dollar, and cautious central bank policies. While gold finds safe-haven support, oil faces pressure from both oversupply and geopolitical risks. Investors should prepare for further volatility ahead.

  • Global Retail Shock and Rising Geopolitical Tensions 

    Global Retail Shock and Rising Geopolitical Tensions 

    Retail Sales Drop in UK & US Amid Middle East Escalation 

    UK retail sales fell sharply by 2.7% in May, reversing a strong 1.3% gain in April, driven mainly by a notable drop in food store purchases. This was far worse than economists’ forecast of a 0.5% decline. 

    On an annual basis, sales dropped 1.3%, retreating from a 5.0% surge in April which had been boosted by sunny weather and food spending. 

    Meanwhile, U.S. retail sales also slumped by 0.9%, the largest drop since January, adding to April’s downwardly revised decline of 0.1%. 

    Despite these figures, the Bank of England kept interest rates steady at 4.5%, citing labor market risks and energy price concerns amid intensifying Middle East conflicts. 

    Bank Governor Andrew Bailey noted that interest rates remain on a “gradual downward path,” though not guaranteed. 

    Tensions escalated as the White House announced that President Trump will decide within two weeks whether to engage Iran militarily. The U.S. aims to keep nuclear talks open, but recent events and an Israeli strike on Iranian nuclear sites, especially Fordow, have worsened the crisis. 

    Crude oil prices, which had seen three straight weeks of gains, plunged on Friday as traders reacted to U.S. signals on avoiding escalation. Supply concerns had earlier supported the rally, bolstered by a large drop in U.S. stockpiles. 

    Gold prices also fell, heading for a weekly loss. A strong dollar and lower Fed rate cut expectations pressured the metal, despite support from geopolitical fears. 

    Conclusion: 

    Global markets are facing sharp turbulence as retail sales slump and Middle East tensions flare. Traders and investors remain cautious, closely watching central banks and geopolitical flashpoints for the next move. 

  •  US-China Trade Talks Progress Amid Global Economic Shifts 

     US-China Trade Talks Progress Amid Global Economic Shifts 

    Rare Earths, Unemployment, and Risk Appetite in Focus

    1. Trade Negotiations Between US and China: 

    • Talks between the world’s two largest economies are set to continue through Tuesday. 
    • Optimism grows that these talks will ease the bitter tariff war. 
    • President Trump noted on Monday that talks are “going well” and he’s receiving “only good reports.” 
    • Focus is now on China’s restrictions on rare earth metals and US limits on chip exports. 

    2. UK Unemployment Rises: 

    • The UK unemployment rate rose to 4.6% in April, the highest since July 2021. 
    • Wage growth excluding bonuses slowed to 5.2% annually, below forecasts. 
    • The Bank of England recently cut interest rates by 25 basis points to 4.25%, citing weaker global growth. 

    3. Market Reaction and Commodities: 

    • Risk appetite improved amid trade optimism, weakening demand for safe havens like gold. 
    • Gold prices dipped ahead of key US inflation data due Wednesday. 
    • Oil prices posted modest gains, supported by ongoing US-China talks and stalled US-Iran nuclear negotiations. 
    • Both major oil contracts were on track for a fifth consecutive session of gains, building on last week’s 4% jump. 

    🏁 Conclusion: 

    The ongoing US-China trade talks are injecting optimism into global markets, lifting risk appetite while pressuring safe havens. However, broader economic signals, such as rising UK unemployment and inflation uncertainty, show that challenges remain. Markets are cautiously hopeful for de-escalation and a boost in global trade flow.