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Gold prices hold steady as investors evaluate US tariff hike

Gold prices held steady after U.S. president Donald Trump announced higher tariffs for imports from Japan and South Korea. A firmer dollar and higher Treasury yields also limited gains.

As of 0220 GMT, spot gold was unchanged at $3,334 an ounce. U.S. Gold Futures are unchanged at $3.344.20.

Trump told trade partners on Monday that the U.S. would begin imposing tariffs of 25% on all goods imported from Japan and South Korea on August 1. This marks a new phase in his trade war, which he began earlier this year.

Trump stated that the deadline of August 1, 2018 for the implementation of tariffs is firm, but he will consider extensions if other countries make proposals.

The "reciprocal tariffs", which were set at 10%, remained in place until the 9th of July to allow time for negotiations. However, only agreements have been reached with Britain and Vietnam.

Tim Waterer, KCM Trade's Chief Market Analyst, said that Trump's latest tariffs letters keep gold on the radar of investors looking for a hedge against uncertainty. However, a strong dollar and rising bond yields limit the metal's upside potential in the short term.

The yield on the benchmark 10-year U.S. notes hovered around a two week high while the U.S. Dollar Index steadied, after hitting a one-week-high in the previous session.

Gold's price increases when the dollar is stronger.

Waterer stated that "traders appear relatively unfazed" by Trump's tariffs letters. With safe-haven demands largely contained, gold is just waiting to see if a breakout on the topside occurs.

Trump's tariffs have increased inflation fears and complicated the Federal Reserve's efforts to reduce interest rates.

The minutes of the Fed meeting from June, which are expected to be released on Wednesday, will provide more information about the central bank's outlook.

The spot price of silver fell 0.1%, to $36.78 an ounce. Platinum rose 0.6%, to $1379.29, and palladium grew 1%, to $1170.46. (Reporting and editing by Sumana Nady and Subhranshu Sahu in Bengaluru.

(source: Reuters)