Morning Note: Gold Gains on Tariffs; Trump Targets EU/Mex; Japan Poll

Gold Gains as Trump Tariffs Stir Demand

Gold prices climbed to approximately $3,374 per ounce on Monday during the Asian trading session. The rally was driven by renewed perceived safe-haven demand after President Donald Trump announced new tariffs, intensifying global trade tensions. In official letters to the EU and Mexico, Trump imposed a 30% tariff on each, citing their trade deficits with the U.S. as a "major threat" to national security.

These measures follow a broader wave of tariff hikes introduced last week, which included more than 20 countries such as Japan, South Korea, Canada, and Brazil. The new tariffs are set to take effect on August 1. Meanwhile, investors are turning their attention to a series of key U.S. economic indicators—CPI, PPI, industrial production, and retail sales—which are expected to provide clearer guidance on the Federal Reserve’s next move on interest rates.

(Gold Daily Price Chart, Source: Trading View)

From a technical analysis perspective, gold prices have rebounded from the support zone of 3,230 – 3,250, as indicated by the formation of higher highs and higher lows. Currently, the price is retesting the order block at 3,339 – 3,359. It broke above this zone earlier during the Asian trading session at the time of writing, but has since retraced and is now retesting the area. If the price can close above this zone, it may potentially continue to surge higher.

Trump Threatens 30% Tariffs on EU and Mexico

President Donald Trump announced plans on Saturday to impose a 30% tariff on imports from Mexico and the European Union starting August 1, following failed negotiations on a broader trade agreement. In letters posted to his Truth Social account, addressed to European Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum, Trump claimed the tariffs were necessary due to the persistent trade deficits, calling for full market access to the U.S. without reciprocal tariffs.

The EU and Mexico quickly condemned the move as unfair and economically disruptive but expressed willingness to continue talks ahead of the deadline. Von der Leyen warned the tariffs could severely damage transatlantic supply chains, impacting businesses, consumers, and patients across both regions. The EU has long sought a comprehensive trade agreement with the U.S., but the latest tariff threat has further escalated tensions and unsettled global markets.

(EUR/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the EUR/USD currency pair has been in a bullish trend since February 2025, as indicated by the formation of higher highs and higher lows. Recently, the pair was rejected from the resistance zone of 1.1800 – 1.1850, suggesting that bearish forces are beginning to regain some control. This could potentially drive the pair lower to retest the swap zone at 1.1470 – 1.1520.

Japan Election May Complicate BOJ Policy Plans

Japan’s central bank may come under increased political pressure to delay interest rate hikes as opposition parties favouring tax cuts and loose monetary policy are expected to gain influence after the July 20 election. Opinion polls indicate Prime Minister Shigeru Ishiba’s ruling coalition could lose its upper house majority, likely forcing him to work with smaller parties that support more accommodative fiscal and monetary policies.

While Ishiba has backed the Bank of Japan’s gradual rate hikes to combat inflation and reduce the country’s massive public debt, growing opposition could complicate those plans. Pressure to avoid tightening and push for sales tax cuts may lead to higher bond yields, making it harder for the BOJ to normalise policy. The central bank has declined to comment on the potential impact of the election on its strategy.

(USD/JPY Daily Chart, Source: Trading View)

From a technical analysis perspective, the USD/JPY currency pair has rebounded from the support zone of 142.10 – 142.70, as indicated by the formation of higher highs and higher lows. It has broken above the order block of 144.60 – 145.10 with strong bullish momentum and is currently approaching the resistance zone of 147.70 – 148.20. This solid bullish structure may potentially continue to drive the pair higher and determine its next directional move.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.