Gold (XAU/USD) price surged on Friday, trading above $3,340 at the time of writing, as trade tensions and safe-haven demand have overshadowed rising US yields.

US President Donald Trump announced on Friday a sweeping 35% tariff on all Canadian imports, effective from August 1, in a move that rattled global markets.

The decision is particularly significant given that the United States is Canada's largest trading partner, accounting for 76% of Canadian exports in 2024, according to Statistics Canada.

Trump also warned of broader action, stating: "We're just going to say all of the remaining countries are going to pay, whether it's 20% or 15%. We'll work that out now."

His remarks fueled fears of a new wave of blanket tariffs, boosting demand for Gold as a tariff risk hedge.

Gold daily digest: XAU/USD benefits from safe-haven demand on broader tariff risks

The release of the Federal Reserve's (Fed) June meeting Minutes on Wednesday revealed growing concern among policymakers about the inflationary impact of escalating tariffs. The minutes noted that "most participants highlighted the risk that tariffs could have more persistent effects on inflation." Officials also reiterated they are "well-positioned to wait for more clarity on the outlook for inflation and economic activity."

According to the CME FedWatch Tool, markets now see a 62.9% probability of a 25 basis point interest rate cut in September. So far this year, the Fed has kept interest rates unchanged within the 4.25%–4.50% range.

Meanwhile, President Donald Trump escalated trade tensions this week by announcing a 50% tariff on Copper, effective August 1, citing national security concerns. "I am announcing a 50% TARIFF on Copper, effective August 1, 2025, after receiving a robust NATIONAL SECURITY ASSESSMENT. America will, once again, build a DOMINANT Copper Industry," Trump declared on Truth Social on Wednesday.

Brazil was also hit with a 50% tariff, with Trump directly linking the move to what he called the political persecution of former President Jair Bolsonaro, describing the proceedings as a "witch hunt". He further ordered a Section 301 investigation into Brazil's digital trade practices, signaling the potential for additional tariffs.

At a Cabinet Meeting on Tuesday, Trump confirmed that the August 1 tariff deadline would not be extended, stating that "Everybody has to pay. And the incentive is that they have the right to deal in the United States." Reinforcing this stance, he later wrote: "TARIFFS WILL START BEING PAID ON AUGUST 1, 2025. There has been no change to this date, and there will be no change."
For Gold, these developments may continue to support the metal's safe-haven appeal.

Source: Fxstreet