Gold prices pull back.
Gold prices fell slightly in Asian trade on Monday, giving back some of last week’s gains after U.S. President Donald Trump over the weekend reneged on his threat to immediately impose 50% tariffs on the European Union.
But losses in gold were limited by persistent weakness in the dollar and a steady sell-down in Treasuries, as markets remained on edge over the U.S.’ deteriorating fiscal health and rising debt levels.
Risk sentiment was also rattled by Minneapolis Federal Reserve President Neel Kashkari warning that the tariff shock was likely to be stagflationary, keeping safe haven demand in play.
Trump postpones 50% tariffs against EU
Trump said on Sunday evening that he had agreed to postpone his recently proposed 50% tariffs on the European Union to early-July, citing positive dialogue with EU head Ursula Von Der Leyen.
The move comes after Trump on Friday threatened to impose 50% tariffs on the EU from early-June, citing a lack of progress in trade negotiations.
Oil climbs after Trump extends EU trade talks.
Oil prices gained on Monday after U.S. President Donald Trump extended a deadline for trade talks with the European Union, easing concerns about U.S. tariffs on the bloc that could hurt the global economy and fuel demand.
Brent crude futures rose 26 cents, or 0.4%, to $65.04 a barrel by 0433 GMT while U.S. West Texas Intermediate crude was up 24 cents, or 0.39%, at $61.77 a barrel.
Trump said he agreed to extend a deadline for trade talks with the European Union until July 9 after Ursula von der Leyen, president of the European Commission, said the bloc needed more time to strike a deal.
Trade and tariff headlines, along with ongoing fiscal concerns are going to be the main wild card for risk sentiment and crude oil this week, Sycamore said.
Brent and WTI extended gains after settling 0.5% higher on Friday as limited progress in U.S.-Iran nuclear talks alleviated concerns of more Iranian oil returning to global markets and as U.S. buyers covered positions ahead of the three-day Memorial Day weekend.
Euro jumps, dollar swoons.
The euro jumped along with risk-sensitive currencies like the Australian dollar on Monday after President Donald Trump backed down from threatened 50% duties on European Union shipments from June 1, after the bloc asked for time to “reach a good deal.”
The dollar continued its slump against a broad swathe of currency peers as Trump’s policy reversals, as well as his sweeping spending and tax-cut bill currently in legislation, turned investors off from U.S. assets.
“The ’Sell America’ theme, which obviously was the dominant theme back in April, is back on show,” said Ray Attrill, head of FX research at National Australia Bank (OTC:NABZY).
“Markets have probably taken the view – and probably rightly so – that where we land eventually on a tariff situation between the U.S. and the EU is not going to be at 50%, but how we get there is frankly anybody’s guess at the moment.”
The euro climbed as much as 0.55% to reach $1.1418 for the first time since April 29.
The Aussie jumped 0.58% to $0.6537, a level not seen since November 25. The New Zealand dollar soared 0.75% to the highest since November 7 at $0.6031.
Sterling advanced as much as 0.38% to scale its highest level since February 2022.
The safe-haven yen and Swiss franc were overall weak as market sentiment improved, but they still appreciated against the embattled U.S. dollar.
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