Gold and Silver Prices Soften After Trump Tapers Tariffs

 

Gold and Silver Prices Soften As Trump Pulls Back on Tariffs

(Bullion News Network) – Gold and silver pulled back today but will end the week in the green. Gold prices dropped marginally, peaking at just under $2,930/ozt after market open before sliding a few dollars lower than Thursday’s closing price. Silver suffered a bigger loss, sliding over $0.20 per troy ounce. The price action drove the gold-silver ratio higher to 89.64:1, up .65:1 from yesterday’s close. The precious metals market fell in-line with Wall Street to close out a volatile trading week, with the latter erasing the entire post-election “Trump bump” amid investor concerns over President Trump’s tariff wars with China, Mexico, and Canada. 

On Thursday, the U.S. leader expanded exemptions for Canadian and Mexican goods, taking a bit of wind out of the sails of safe haven traders who pushed gold to multiple all-time highs to start 2025 in the wake of the aggressive sanctions on the USA’s North American allies. The new adjustment to what was a blanket 25% tariff on all imported goods from Canada and Mexico exempts goods that satisfy the U.S.-Mexico-Canada Agreement (USMCA)  rules of origin, according to the White House. Additionally, tariffs on potash and energy products falling outside of this set of established trade rules will face a reduced tariff of only 10%. Goods that meet the USMCA preferences will no longer be subject to a tariff, according to the new rule. 

This adjustment comes on the heels of criticism from the automotive sector, which analysts say would be disproportionately impacted by the tariffs on Mexico and Canada, two major importers of vehicles and automotive technology into the United States. “our automotive industry […] should not suffer significant disruption,” the White House said in a fact sheet published Thursday, “just because of the structure of its supply chain.” For the precious metals sector, the expanded exemptions could drive down safe haven demand for gold and silver, which has largely been buoyed by fears that President Trump’s tariffs will raise prices for American consumers. 

Also impacting safe haven markets is likely today’s jobs report, which came in worse than expected. The U.S. created only 151,000 jobs in February, up from 125,000 on January but below the median projection of 170,000. Wall Street sank on the news, ringing in its worst week since September of 2024. The weak labor market report, paired with a .1% jump in the national unemployment rate, hit the implied probability of a rate cut from the Federal Reserve when the Federal Open Market Committee (FOMC) meets on March 19th. CME FedWatch now predicts a 3% probability of a 25 basis point cut at that meeting, down from 12% yesterday and 8% last Friday. 

That being said, geopolitical uncertainty continues to underpin historically strong demand for safe haven assets. Following the White House’s decision to pause intelligence sharing with Ukraine and cybersecurity defense operations against Russia, the Russian army renewed its offensive against Ukraine. The move prompted condemnation from President Trump, who promised a series of “large scale banking sanctions, sanctions, and tariffs on Russia” until the country takes steps toward “a cease fire and final settlement agreement on peace.” The wars in Ukraine and Gaza were significant safe haven demand drivers throughout 2024, and developments in either conflict should have a palpable effect on the market’s appetite for gold, silver, and other metals heading into Q2 2025 and beyond. 

Next week’s Consumer Price Index (CPI) will give traders more insight into the direction of inflation, which should impact the Fed’s perception of economic progress heading into the March meeting. This report will be released on Wednesday, March 12th. One day later, on the 13th, the Producer Price Index (PPI) will give the FOMC another data set to consider before deciding whether an interest rate cut is justified. Interest rate speculation was a major market driver for precious metals in 2024, and the correlation between market rate cut expectations and gold prices is expected to continue this year. Overall, investors should expect a news-heavy week ahead as markets prepare for another Fed meeting, more news on tariffs, and fresh developments in several geopolitical conflicts. 

Gold and silver lost moderate ground today but will end the week in the green.