U.S President Donald Trump’s tariffs took a surprising twist with the Swiss gold market being targeted.
XAUUSD – Daily Chart
The price of XAUUSD jumped on the latest news and gave up some of those gains. The price setup has not changed, and the price could make a move toward the resistance at $3,431.
A victim of a severe 39 percent tariff on Swiss imports into the United States was the gold refining sector. The price of gold futures market hit a record high Friday after U.S. customs authorities clarified that gold bars weighing either one kilogram or 100 ounces (2.8 kilograms) would be subject to tariffs.
The July 31 letter was first reported last week by the Financial Times. However, a White House official told AFP that Trump’s administration plans to “issue an executive order in the near future clarifying misinformation about the tariffing of gold bars”.
It is still unclear whether the products will be exempt from the latest action. One kilo of gold bars is the most commonly traded contract on the U.S. Comex exchange. Switzerland does not have gold mines, but it has an active refining market that supplies a large amount of gold to the physical market.
Swiss officials had travelled to Washington during the week to secure a similar deal to the European Union, whose products must now pay a 15 percent rate. A failure to provide meaningful benefits to the United States resulted in the country returning without a deal in place. The latest tariffs are also an issue for the Swiss government, as gold trading has a big impact on the country’s trade balance. Up to 18% of Swiss exports went to the U.S last year, and the country has a trade surplus of around $48 billion with its trade partner.
“While gold exports have received attention because they have surged this year, historically, Switzerland has run a trade deficit in gold with the US, so gold is not a key contributor to Switzerland’s structural trade surplus with the US,” said Adrian Prettejohn at Capital Economics.
The refining industry said it makes very small profits on its activity and is seeking an exclusion. Trump’s scheduled meeting with Vladimir Putin this week could be an important event for gold at these levels.
