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Gold prices rise on weaker dollar as trade war intensifies

Gold prices rose on Thursday as a result of a slight decline in bond and dollar yields. Investors also kept an eye on the trade talks, with President Donald Trump expanding his tariff war.

By 0157 GMT, spot gold had risen 0.3% to $3322.46 an ounce. U.S. Gold Futures rose 0.3% to $3,331.

Trump ramped up his global tariff attack on Wednesday. He announced a new tariff of 50% on U.S. imports of copper and a duty 50% on Brazilian goods, both starting on August 1.

Trump issued tariff notices on Thursday for seven minor trading partner countries, in addition to the 14 other notices issued earlier this week. These included South Korea and Japan. The 25% levies will take effect August 1, unless an agreement is reached.

Trump also said that trade talks with China and Europe, the U.S.'s largest bilateral trading partners, were going well.

The market impact of tariffs appears to be decreasing with every new headline. "Tariff fatigue is upon us, and traders require a new catalyst in order to wake up volatility from the lull," Matt Simpson, senior analyst at City Index, said.

The U.S. Dollar Index fell 0.3% while the yield of benchmark 10-year U.S. Treasury Notes retreated from its three-week high.

A lower yield reduces the opportunity cost for holding bullion that does not pay a return, and a weaker US dollar makes gold more affordable for holders of foreign currencies.

Minutes from the Federal Reserve meeting of June 17-18 showed that "a few" Fed officials thought interest rates could be cut as soon as this month. The majority, however, preferred reductions to occur later in the year because of inflation concerns linked to Trump's trade policies.

At its meeting in June, the Federal Open Market Committee unanimously decided to keep rates unchanged. The next policy meeting is scheduled for July 29-30.

(Reporting by Anmol Choubey in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu) (Reporting and editing by Rashmi aich and Subhranshu Sahu in Bengaluru.

(source: Reuters)