Gold approaches $3,400, as heightened trade and geopolitical tensions boost haven interest

OUTSIDE MARKET DEVELOPMENTS: Even with the August 1 deadline behind us, trade uncertainty remains elevated. There is another deadline in a week for China to reach a durable trade deal with the U.S., although there are rumblings of another extension.

President Trump threatened "secondary tariffs" on countries purchasing Russian and Iranian oil, aiming to pressure nations like China and India to curb their imports. "They're fueling the war machine, and if they're going to do that, then I'm not going to be happy," Trump said.

Speaking on CNBC, President Trump went on to say, "If energy goes down enough, Putin is going to stop killing people. If you get energy down, another $10 a barrel, he's going to have no choice because his economy stinks."

China and India are pushing back. "Coercion and pressuring will not achieve anything. China will firmly defend its sovereignty, security and development interests," said China's Foreign Ministry. "It is revealing that the very nations criticising India are themselves indulging in trade with Russia (despite the Ukraine war)," India's Foreign Ministry said in a statement.

Special envoy Steve Witkoff is scheduled to be in Moscow ahead of Friday's deadline for a ceasefire deal between Russia and Ukraine. If a deal can't be reached, Russia will face additional sanctions and tariffs.

Geopolitical tensions between the U.S. and Russia are on the rise, after a saber-rattling comment by the deputy chairman of Russia's security council prompted Trump to reposition two U.S. nuclear submarines to counter the threat. Russia further escalated the situation by announcing that it would no longer be bound by the 1987 Intermediate-Range Nuclear Forces (INF) Treaty.

According to Bloomberg, copper is flowing back into LME warehouses as traders unwind massive tariff-related bets after refined products were exempted last week. Copper remains defensive after plunging 23% last week from record highs near $6.

Trade Balance shrank 16% to -$60.2 bln in June, inside expectations of -$61.7 bln, versus a revised -$71.7 bln in May (was -$71.5 bln).

S&P Services PMI was revised up to a seven-month high of 55.7 in July, versus a preliminary print of 55.2 and 52.9 in June.

Services ISM fell 0.7 points to 50.1 in July, below expectations of 51.5, versus 50.8 in June. Prices jumped to 69.9 from 67.5 in June.

RCM/TIPP Economic Optimism Index rose 2.3 points to a six-month high of 50.9 for August, above expectations of 49.2, versus 48.6 in July.


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