Gold (XAU/USD) saw a recovery on Monday as growing trade tensions between the European Union (EU) and the United States (US) boosted investor demand for the safe-haven asset.
With the August 1 deadline for potential US tariffs fast approaching, hopes for a breakthrough in trade negotiations between the two economic powerhouses are fading. As of this report, Gold has climbed back above $3,370 per ounce.
Rising EU-US Trade Frictions Support Gold Prices
Talks between Washington and Brussels have shown little progress in recent weeks. US President Donald Trump has threatened to impose a 30% tariff on most goods imported from the EU in an effort to narrow the trade deficit.
Despite the rising tensions, US Commerce Secretary Howard Lutnick struck a hopeful tone in a weekend interview with CBS News, saying, “These are the two biggest trading partners in the world, talking to each other. We’ll get a deal done. I am confident we’ll get a deal done.”
However, Lutnick emphasized that the US would not delay its deadline. “That’s a hard deadline, so on August 1, the new tariff rates will come in,” he added.
According to data cited by CNBC, total trade between the US and EU reached $1.96 trillion in 2024, highlighting the significant economic stakes involved.
Even if an agreement is reached, the US has indicated that baseline tariffs between 15% and 20% may still apply. In response, the EU has warned of potential retaliatory measures should a deal fall through.
This brewing trade conflict has sparked risk aversion across markets, pressuring the US Dollar and making Gold more attractive to global investors. A weaker USD generally supports Gold prices, as it becomes more affordable for buyers using other currencies.
As global uncertainty deepens, Gold continues to solidify its role as a safe-haven hedge in times of geopolitical and economic strain.
