Tariff Uncertainty Rocks Commodities Markets
As the world waits with bated breath for President-elect Donald Trump’s inauguration speech, commodities markets are bracing for impact. Goldman Sachs analysts have crunched the numbers, and their findings suggest that the copper market is pricing in a 50% chance of a 10% U.S. tariff on the metal by the end of Q1 2023.
Copper Prices Ease Amid Tariff Uncertainty
The London Metal Exchange saw three-month copper prices dip 0.3% to $9,167 a metric ton, following a one-month peak last week. This volatility is largely driven by Trump’s campaign promises of tariffs as high as 10% on global imports, 60% on Chinese goods, and a 25% import surcharge on Canadian and Mexican products.
Oil Markets on High Alert
Goldman Sachs analysts also note that the oil market is pricing in a nearly 40% chance of a 25% U.S. tariff on Canadian goods, including oil. This is significantly higher than the bank’s own 15% subjective probability of a 25% effective tariff by year-end. Brent crude futures traded around $80.69 a barrel, while U.S. West Texas Intermediate crude April contract remained steady at $77.36.
Gold: A Safe Haven from Tariffs?
In contrast, Goldman Sachs assigns only a 10% chance to a 10% effective tariff on gold being introduced within the next 12 months. The bank believes that gold’s status as a financial asset makes it likely to be exempt from broad-based tariffs. Spot gold prices rose 0.3% to $2,708.77 per ounce, while U.S. gold futures remained little changed at $2,749.70.
Gold Stocks Surge as Tariff Fears Grow
In a sign of growing unease, gold stocks in COMEX-approved warehouses have jumped by one-third in the past six weeks. Market players are seeking deliveries to hedge against the possibility of tariffs, driving up demand for the precious metal. As the world waits for Trump’s next move, one thing is clear: commodities markets are in for a wild ride.
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