WASHINGTON (dpa-AFX) - Gold prices fell on Monday as the industry awaits clarification about reports suggesting the US plans to tax gold imports. The surprising news that surfaced last Friday sent gold prices upwards last weekend.
Front Month Comex Gold for August delivery plunged $86.00 (or 2.50%) to $3,353.10 per troy ounce.
Front Month Comex Silver for August delivery slumped 75.50 cents (or 1.97%) to $37.662 per troy ounce today.
Last Friday, gold prices surged following a Financial Times report which stated that one-kilo bullion bars imported by the US may be subjected to new levies, contrary to the earlier assumption that the gold trade would not be touched by the US government's aggressive tariff plans.
The precious metal has climbed to about 30% over this year, although a vast majority of the gains happened in the first four months.
One-kilo bars being the most traded form of gold, comprising most of Switzerland's exports, Switzerland stands to lose heavily if the levy takes effect.
However, Friday's rally melted today as investors await further clarity on this issue from the White House.
On the data front, though there is no major economic data due from US today, consumer price inflation data is set to come out on Tuesday and producer price data is set to be released on Thursday.
Following the poor jobs data earlier this month, anticipation for an interest rate cut by the US Fed in September has gone up. If this week's upcoming inflation data reveals a higher-than-expected number, the Fed may find a reason to suspend the rate cut decision for a while. That could impact gold prices.
With some of the US trading partners already successful in striking a trade deal with the US government, other major partners are working hard to seal a deal.
Notably, US President Donald Trump has imposed 50% tariffs on India, half of which are a 'penalty tariff' for purchasing oil from Russia, which has not ceded to demands to end its war with Ukraine. The initial 25% came into effect on August 7 and the remaining 25% is set to take off from August 27.
Last Friday, Trump had announced that he will be meeting Russian President Vladimir Putin on August 15 in Alaska to negotiate an end to the conflict.
Against the backdrop of Trump's tariff war and the current risks of the US economy going into 'stagflation' (where inflation is high but economic growth is slower) along with a weakening job market, traders feel that the Fed's decision next month could steer gold prices up or down.
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