Gold prices climbed on Friday as the US dollar tumbled following President Trump’s threat to impose 50% tariffs on EU goods starting June 1. The dollar index dropped 0.9% to 99.07—its lowest level in weeks—as investors sought safe havens amid renewed trade tensions. The precious metal benefited from both dollar weakness and growing risk aversion, with equity markets already under pressure from rising Treasury yields and concerns over Trump’s costly tax reform bill.
The tariff announcement marked a sharp reversal from recent trade optimism, which had fueled a “Buy America” rally after deals with China and the UK. Stocks extended their weekly losses, with the S&P 500 down 2%, the Dow off 1.9%, and the Nasdaq shedding 1.5% since Monday. The House’s passage of Trump’s tax bill on Thursday further unnerved markets, as analysts warned its $5+ trillion price tag could worsen US debt sustainability.
Gold’s rally highlights its role as a hedge against both currency depreciation and geopolitical risks. With the Senate set to debate the tax bill and the EU likely to respond to Trump’s tariffs, volatility in bullion and FX markets may persist. Traders will watch whether gold can hold gains if the dollar stabilizes near key support levels.
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