Gold prices exploded on Thursday, nearing a new all-time-high over $3,050 per ounce. An important executive order from US President Donald Trump propelled the increase. Specifically, late Wednesday, he declared his intention to impose a 25% tariff on all auto imports. This announcement has embarrassed and continued the weakness of the US Dollar. Even before it started operations, it has failed to generate any demand since the announcement.
Put simply, tariff threats are intensifying concerns about a potential downturn in the US economy. In turn, trust in the currency has suffered a major blow. EUR/USD The EUR/USD pair returned to positive territory approaching 1.0800 during the American session on Thursday. This strength was notable as the Dollar weakened contemporaneously. In similar fashion, the GBP/USD maintained its positive trajectory, hovering around 1.2950 as the Dollar remained weak.
The US Dollar fell on news of the tariffs. Adding fuel to this bearish sentiment was a spate of recent positive US macroeconomic data releases. The combination of these factors have made for a perfect storm for the currency’s current struggle to regain its footing.
President Trump’s tariff announcement has injected uncertainty into the market, intensifying concerns about the potential impact on the US economy. The effort was necessary to protect important domestic industries, but it has unfortunately caused unnecessary and avoidable tensions with our valuable international trading partners. Investors are understandably glued to these unfolding events, as they have major repercussions for global markets.