U.S. President Trump has confirmed that gold will receive a new tariff exemption, but market observers still predict that gold will see a new round of increases.
Last week, reports indicated that some gold bars might fall under Trump’s so-called 'reciprocal tariffs', leading U.S. gold futures to reach a historic high. The confusion about whether gold would be subject to tariffs has since been resolved.
On July 31, U.S. Customs and Border Protection (CBP) ruled that the 1-kilogram and 100-ounce gold bars from a Swiss gold refinery should fall under customs codes that cannot be exempted from 'reciprocal tariffs'. However, Trump confirmed on his 'Truth Social' platform on Monday, 'Gold will not be taxed!' Prior to this, the White House had stated it would clarify the 'misinformation' regarding gold bar tariffs.
Whether gold is included in the Trump administration's tariff system or not, Philippe Gijsels, chief strategist at BNP Paribas Fortis, was already bullish on gold. Earlier this week, he told CNBC that he believes gold prices could exceed his target price of $4,000; on Tuesday, he added that the president's confirmation of an exemption for gold tariffs cleared the way for gold prices to soar to new highs.
Trump has pulled back on the gold tariff issue,” he said, “Throughout history, gold has always been a currency and a safe-haven asset. To play this role is not dependent on location. Therefore, this news is positive for the gold market.
Gijsels pointed out that gold typically performs well during periods of turmoil, uncertainty, and volatility. “When people are concerned about deficits and debt levels that are unsustainable and inflation continues to rise, they seek a stable beacon,” he said. “In short, the current environment is a 'perfect storm' for gold. This means that the bull market for this precious metal may just be beginning.
UBS Group also predicts that spot gold prices will rise. Its strategists stated in a report on Tuesday that London spot gold prices are expected to reach $3,500 per ounce by the end of the year, an increase of about
4.5%.
They stated, 'The recent controversy over the classification of U.S. gold imports indicates that there may be confusion within the Trump administration regarding the statements, interpretations, and actual implementation of tariffs.'
They also added, 'Dramatic events are hard to forget' -- even if the White House clarified the tariff exemptions, the prior confusion may still have some lasting impact on the mindset of gold investors.
Therefore, while we believe this will not affect the demand for gold itself, the way in which gold is held has become increasingly important,” added the UBS strategist. “Our benchmark target for London spot gold prices is $3,500 per ounce by the end of 2025, with potential for even larger increases if economic or geopolitical risks escalate.
Michael Hsueh, research analyst at Deutsche Bank, told CNBC on Tuesday that the exemption of tariffs on gold was not unexpected for the market.
The market had already anticipated this, as evidenced by the narrowing EFP (futures-to-spot) spread between London and New York yesterday,” he stated in an email.
The EFP spread that Hsueh referred to is a measure of the difference between New York gold futures and London spot gold prices. There were previous reports that gold might be included in Trump’s specific country tariff list, and some analysts questioned how futures contracts would settle if import costs rose.
Hsueh also mentioned on Tuesday that given the ruling on import codes in July, there was some confusion.
is still not completely resolved.
There remains some uncertainty about how to resolve this contradiction, but this
has not had a significant market impact (as long as the contradictions can be resolved).