(Reuters) – Gold rose on Thursday, supported by renewed safe-haven demand after US President Donald Trump slapped an additional 25% tariff on Indian imports, escalating trade frictions.
Spot gold was up 0.3% at $3,378.18 per ounce as of 0452 GMT. US gold futures gained 0.4% to $3,445.60.
"Trump has been dishing up fresh tariff threats which is keeping gold in the frame as a defensive play for investors," Tim Waterer, chief market analyst at KCM Trade said.
"Gold is moving towards the doorstep of the psychological $3400, with risk-assets being kept off-balance somewhat by the constant tariff proclamations by the US president."
Trump on Wednesday slapped an additional 25% tariff on imports of Indian goods, citing New Delhi's continued buying of Russian oil, deepening a trade rift between the two nations after talks reached a deadlock.
The new import tax, effective 21 days after August 7, will raise duties on some Indian exports to as high as 50% – among the highest levied on any US trading partner.
Trump also said the United States will impose a tariff of about 100% on imports of semiconductors but offered up a big exemption – it will not apply to companies that are manufacturing in the US or have committed to do so.
Adding to gold's support, the dollar index hovered near a more than one-week low after surprisingly weak US jobs data last week triggered bets for a US rate cut in September.
Traders are now pricing in a 95% chance of a 25 basis point rate cut next month, according to the CME Group's FedWatch Tool.
The Federal Reserve may need to cut rates in the near-term in response to a slowing US economy, Minneapolis Fed President Neel Kashkari said.
Gold, traditionally considered a safe-haven asset during political and economic uncertainties, tends to thrive in a low-interest-rate environment.
Elsewhere, spot silver rose 0.5% to $38.04 per ounce, platinum lost 0.4% to $1,328.77 and palladium gained 1.3% to $1,146.80.