In light of the anticipated global economic turmoil, there has been a preference for safe-haven assets, with oil demand expected to decrease while copper prices experience volatility.
As U.S. President Donald Trump announced reciprocal tariffs with global trade partners, the price of gold, a representative safe-haven asset, hit an all-time high. The international crude oil prices have dropped due to the anticipated decline in demand from the global economic disarray.
According to Bloomberg and Reuters, after President Trump announced the reciprocal tariff rates on the 2nd (local time), the spot price of gold on the New York Mercantile Exchange increased by 0.6%, reaching $3,129.46 per ounce. U.S. gold futures also rose by 0.6%, closing at $3,166.20. Gold prices hit a record high, climbing approximately 1% during the day. Investors tend to view gold as a safe haven when concerns about the global economy increase.
International gold prices have risen significantly since last year due to massive purchases by central banks and increased demand from Asia, marking a 19% increase this year. The price of copper, widely used industrially, was highly volatile. It surged by 2.2% during the day amid tariff concerns but reversed to a decline with news of reciprocal tariff exemptions, ultimately falling 0.6%. It closed 0.1% higher compared to the previous day.
Bart Melek, Global Head of Commodity Strategy at TD Securities, stated, “Tariffs generally have a negative impact on copper prices.” The burden of price increases was reduced as steel, aluminum, gold, and copper were exempted from the newly applied reciprocal tariffs.
International oil prices fell amid forecasts that the reciprocal tariffs could disrupt the global economy. West Texas Intermediate (WTI) futures were at $70.73 per barrel as of 4:59 PM New York time on the 2nd, a 1.4% drop from the day’s closing price. Concerns from importers and consumers were alleviated as oil from Canada and Mexico, the largest suppliers of U.S. crude, was exempted from reciprocal tariffs under the United States-Mexico-Canada Agreement (USMCA).
Pavel Molchanov, an analyst at Raymond James, commented, “Tariffs have a negative impact on the global economy as a whole, and absent any other variables, they also hurt oil demand.”