Gold Slips After Trade Deal Between US and Japan Calms Market Tensions

Highlights:

• Gold prices dipped 0.3% to US$3,420.97 an ounce at the time of writing after a new US-Japan trade deal reduced investor demand for safe-haven assets.
• The agreement includes Japan investing US$550 billion in the US and limits tariffs to 15%, easing market fears.
• Despite the pullback, gold remains up nearly one-third this year due to ongoing global tensions and economic uncertainty.

Haven Demand Cools as Tariff Fears Recede

Gold prices softened after a three-day rally as investor sentiment shifted following the announcement of a new trade agreement between the United States and Japan. At the time of writing, bullion dipped by 0.3% in local trade to US$3,420.97 an ounce, reflecting a reduction in safe-haven demand. The retreat came after US President Donald Trump revealed a deal with Japan that would limit upcoming tariffs to 15%, a lower figure than many market participants had expected. The levies, initially scheduled for August 1, had caused anxiety among global investors, fueling demand for assets like gold.

US-Japan Agreement Worth $550 Billion

The trade accord includes a commitment from Japan to invest US$550 billion in the American economy. This significant economic partnership appears to have reassured markets, diminishing some of the uncertainty that had driven gold’s recent gains. For much of this year, gold has served as a hedge against geopolitical and economic instability. Its price has risen by nearly one-third year-to-date, boosted by escalating global trade tensions, the war in Ukraine, and conflicts across the Middle East. However, the latest development with Japan suggests a possible easing in one of the major flashpoints impacting market sentiment.

Outlook Still Favourable for Gold Bulls

Despite the short-term pullback, analysts suggest that gold’s outlook remains supported by persistent macroeconomic and geopolitical risks. The possibility of further interest rate adjustments, a still-volatile global trade environment, and regional conflicts could continue to underpin demand for the yellow metal in the months ahead. As global markets digest the implications of the US-Japan pact, gold traders will closely monitor whether this momentum shift proves temporary or marks a broader trend away from safe-haven assets.

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