* US President Donald Trump unnerved investors earlier this week by announcing higher tariff rates against a slew of major economies starting August 1. Moreover, Trump vowed to further escalate his trade wars on Tuesday, threatening US tariffs of up to 200% on foreign drugs and 50% on copper.
* Investors now seem convinced that US tariffs will eventually feed through into higher prices and allow the Federal Reserve to stick to its wait-and-see approach. Moreover, the upbeat US jobs report for June eased concerns about a slowing US economy, and a July Fed rate cut is completely off the table.
* This, in turn, pushed the yield on the benchmark 10-year US government bond and the US Dollar to a two-week high, making the non-yielding Gold price less attractive. The USD bulls, however, seem reluctant and opt to wait for more cues about the Fed's rate cut path before placing fresh bets.
* Meanwhile, investors are still pricing in the possibility of 50 basis points worth of Fed rate cuts by the end of this year, starting in October. Hence, the minutes of the last FOMC meeting and speeches by several Fed officials this week will be looked for more insights into the central bank's policy outlook.