Gold (XAU/USD) is trading between $3,340 and $3,370 on Monday in response to news that the US may impose a 30% tariff on imports from the European Union (EU) and Mexico, effective August 1.

The latest tariff threats on two of America's largest trading partners have provided a tailwind for XAU/USD. At the time of writing, the Gold price is trading near $3,350 as bulls struggle to gain the momentum above $3,370.

European Commission President Ursula von der Leyen and Mexican President Claudia Sheinbaum received letters from US President Donald Trump on Saturday. His remarks fueled fears of a new wave of blanket tariffs, boosting demand for Gold as a geopolitical hedge.

A busy day of economic data on Tuesday will likely serve as an additional catalyst for Gold. As policymakers assess the potential implications of the country-specific and sector-specific tariffs, US inflation data will be in focus.

XAU/USD reacts to Trump tariffs ahead of key economic data releases
Reuters reports indicate that 23 countries have received letters from the US President to date. Tariffs of 50% on imports from Brazil remain the highest announced so far.

Formal letters have also stated that these rates "may be modified, upward or downward, depending on our relationship with your country."
President Trump's Truth Social post also warned the EU against retaliating, quoting that "whatever the number you choose to raise them by … will be added onto the 30%."

The EU Commissioner von der Leyen responded on Sunday. An official statement was published on the European Commission's press corner, which read, "We remain ready to continue working towards an agreement by August 1. At the same time, we will take all necessary steps to safeguard EU interests, including the adoption of proportionate countermeasures if required."

Speaking to NBC News on Thursday, 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."

The US will release the Consumer Price Index (CPI) data for June on Tuesday, providing additional insight into whether tariffs are being reflected in prices. With the Federal Reserve (Fed) closely monitoring tariff risks, this report has a direct impact on monetary policy expectations.

China's Q2 Gross Domestic Product (GDP), Industrial Production, and Retail Sales for June are also scheduled for release on Tuesday. Any disappointments reflecting a significant slowdown in economic activity will likely continue to underpin the upside momentum for Gold.

Source: Fxstreet