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Gold prices rise as investors seek security amid Trump's auto tariffs

The global stock markets tumbled on Thursday after U.S. president Donald Trump announced new auto import tariffs.

Trump announced 25% tariffs for all foreign-made vehicles and auto parts imported to the United States late Wednesday night, causing heavy losses overnight in Japanese and South Korean stock markets.

After the bell, U.S. automobile manufacturers lost ground following the announcement of tariffs. General Motors shares fell 6% while Ford's stock dropped almost 5%. This was due to concerns over the impact of tariffs on their supply chain.

European stocks dropped in the early morning trading. Shares of Europe's largest carmaker Volkswagen, as well as BMW and Mercedes-Benz, were all hit. STOXX 600 fell to a new two-week low at 0958 GMT, with a 0.5% decline on the day.

Investors braced themselves for the impact of Germany's auto sector on the FTSE 100 and DAX.

The yields on euro zone bonds fell, with Germany's two-year yield reaching its lowest level since March 5.

Investors fear that the tariffs will harm growth and increase inflation in the United States.

Trump has said that he might give Beijing a reduction in tariffs in order to reach a deal to sell TikTok. This app helped Chinese stocks outperform Asian trading.

Shigeru Shiba, Japan's prime minister, said that all options are on the table as a response to U.S. tariffs. Canada has said that it may impose retaliatory tariffs, while the European Union is seeking to negotiate a solution.

Trump has announced plans to announce reciprocal duties on all countries at the 2nd of April, which he calls "Liberation Day". Trump stated on Thursday that the tariffs would be "lenient".

Baylee wakefield, multi-assets portfolio manager at Aviva Investors, said that uncertainty on the tariff front is high. This makes it difficult for businesses and investors to plan for the future. It also makes it hard for investors to estimate risk.

We all know that the markets are averse to uncertainty, and we face it in all directions at this moment. I believe that the markets will be trading based on sentiment until next week's announcement.

The dollar index fell by around 0.2% on the currency markets to 104.47. Overnight, the euro fell to a low of $1.0731 for the first time in three weeks. It then recovered and traded at around $1.0769 during early European trading.

Chris Turner, ING's global director of markets, wrote in a report that the market may be dealing with tariff fatigue. Aside from being already priced in, it is possible the lack of reaction was due to Trump's suggestion that the reciprocal tariffs next week could be quite lenient.

Gold prices increased by 0.7% to $3,040 per ounce. Goldman Sachs raised its gold price forecast on Wednesday, citing stronger-than-expected ETF inflows and sustained central bank demand.

The benchmark 10-year Treasury Yield gained 6 basis points to trade at 4.3964 percent.

As markets reacted to the new tariffs, oil prices dropped. Brent crude futures dropped 0.4% to $73.51 per barrel, while U.S. West Texas Intermediate futures declined 0.3% to $69.41. Crude prices tend to be affected by concerns that more tariffs will weaken the world economy and dent energy demand. (Reporting and additional reporting by Stella Qiu, Jiaxing LI, and Kim Coghill; editing by Jamie Freed, Kim Coghill and Tomaszjanowski).

(source: Reuters)