Gold attempts a recovery as Trump announces 25% tariffs on Japan

NEW YORK (July 7) Gold (XAU/USD) is currently attempting a recovery in the American session as markets await more news of trade deals ahead of Wednesday’s tariff deadline, with prices nearing $3,330 at the time of writing.

Bloomberg has reported that US President Donald Trump has sent a letter to Japan informing them of a 25% tariff rate on all Japanese imports to the US, effective August 1.

US yields have also firmed after Thursday’s Nonfarm Payrolls (NFP) report revealed a resilient labour market. This reduced the prospects that the Federal Reserve (Fed) would lower interest rates in July. The positive economic data has eased fears of a slowing economy, lifting the US Dollar.

Expectations that interest rates will remain at higher levels for longer do not bode well for non-yielding assets such as bullion.

Daily digest market movers: Gold awaits details on trade deals, FOMC Minutes

• Reporters spoke to US President Donald Trump at the Morristown Airport on Sunday about the trade negotiations. "I think we will have most countries done by July 9, either a letter or a deal,” he said. 
• Letters outlining the tariffs that will be charged to 12-15 countries are expected to be sent by noon on Monday. The remaining notifications are to be dispatched before Wednesday. Reciprocal tariffs are set to take effect starting August 1.
• Trump has written a post on Truth Social stating that “Any country aligning themselves with the Anti‑American policies of BRICS, will be charged an ADDITIONAL 10 % tariff. There will be no exceptions to this policy.”
• The BRICS summit in Rio de Janeiro is currently underway, and the emerging market nations that established the bloc are beginning to reduce their reliance on the United States. This initiative includes moving away from using the US Dollar as a receiving currency, a concept known as de-dollarization.
• BRICS is an acronym that stands for an association of five major emerging economies: Brazil, Russia, India, China, and South Africa. This group was formed to enhance economic cooperation and promote development in these countries. BRICS nations collaborate on various issues, including trade, investment, finance, and sustainable development. They aim to increase their influence in global economic and political affairs. The bloc also holds annual summits to discuss and coordinate strategies for mutual support and growth.
• The World Gold Survey in June showed that demand for bullion has been on the rise, especially with tensions between the US and China escalating in recent years.  
• The Federal Open Market Committee will release the Minutes from its June Meeting on Wednesday. This report outlines the reasons for maintaining interest rates at the current range of 4.25% to 4.50% in June. It also provides insight into the perspective of the Board of Governors members regarding the prospects of the US economy. This influences expectations of when the Fed may cut interest rates. 

FXStreet