Gold price (XAU/USD) trades firmly above $3,400 during the European trading session on Wednesday, the highest level seen in over five weeks. The precious metal strengthens as global trade tensions continue to persist even as the United States (US) has confirmed a trade agreement with Japan.
On Tuesday, US President Donald Trump announced through a post on Truth.Social that Washington has reached a deal with Tokyo in which the baseline tariff on imports from Japan will be 15%, lower than 25% imposed at the start of this month.
Escalating trade worries between the US and the European Union (EU) continue to keep the global trade outlook on a cliffhanger. Earlier this week, EU officials threatened to retaliate against US tariffs by proportionate countermeasures after a report from the Wall Street Journal (WSJ) stated that Trump is considering a higher baseline tariff rate in a range between %15% and 20% on imports from the trading bloc.
Theoretically, heightened global economic tensions bode well for safe-haven assets, such as the Gold price.
Meanwhile, the underperformance by the US Dollar has also strengthened the Gold price. Technically, lower US Dollar makes the Gold price an attractive bet for investors. The US Dollar trades lower even as the US-Japan trade deal has trimmed tariff uncertainty.
At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades weakly near the two-week low around 97.40 posted on Tuesday.
Source: Fxstreet
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