Lagos — Gold prices pulled back from record high levels as US President Donald Trump temporarily exempted US automakers from his 25% tariffs on Canada and Mexico for one month. The decision helped improve global sentiment, reducing the appeal of safe-haven assets and placing selling pressure on gold.
However, the bullion could see support if retaliatory measures from China, Mexico and Canada continue as concerns about economic growth remain. Trade tariffs could continue to pose risks to global growth although resulting inflationary pressures could prompt central banks to adopt a more restrictive monetary policy which could weigh on gold.
Despite encouraging data from the US services sector, broader economic indicators, such as slowing private-sector job creation and rising jobless claims, point to risks of an economic slowdown. Markets continue to anticipate a Fed rate cut in June, a move that could benefit non-yielding assets such as precious metals.
Looking forward, traders will closely monitor this week’s Nonfarm Payrolls to better assess labor market conditions. Robust results could benefit the dollar, while weaker results may drive renewed interest in gold.
*Hassan Fawaz Chairman & Founder of GivTrade
