By: Swarnalata
Published on: Jun 04, 2025
On Wednesday, June 4, 2025, global markets reflected mounting concerns over rising US tariffs, slowing economic expansion, and shifting central bank behavior. Investors sought refuge in safe-haven assets as gold prices ticked higher, while major currencies and oil extended their cautious moves. This blog post examines the drivers behind this market action, encompassing the latest developments in US trade policy, the Organisation of Economic Cooperation and Development’s (OECD) updated growth forecasts, and the resulting impact on gold, the pound sterling, and crude oil.
As of Wednesday morning, gold futures for August 2025 (symbol GC=F) traded at $3,388 per ounce—up 0.3%—while spot gold hovered around $3,361.05 per ounce, a 0.2% gain. The uptick came against a backdrop of renewed US tariffs on steel and aluminium, prompting portfolio managers and individual investors to reposition toward precious metals as a hedge against economic and geopolitical uncertainty.
On Tuesday, June 3, 2025, President Donald Trump signed an executive order boosting tariffs on imported steel and aluminium to 50%. Although the United Kingdom received a temporary exemption from the increase, other key trading partners faced steeper duties based on national security exemptions. China immediately fired back, accusing the US of “totally violating” prior agreements and pledging to defend its own economic interests. Chinese officials warned they would respond “in due course” if Washington failed to rescind or adjust the duties—raising the specter of a broader trade tit-for-tat that could weigh on global growth.
Further compounding market unease, the OECD on Tuesday lowered its global gross domestic product (GDP) growth forecast from 3.3% in 2024 to 2.9% for both 2025 and 2026. In its “Economic Outlook” report, the OECD warned that “the outlook is becoming increasingly challenging,” citing trade tensions, geopolitical frictions, and lingering supply chain disruptions. The revised projections marked the third downward revision in six months, underscoring the organization’s view that peak growth momentum had already passed.
Many investors took refuge in gold amid expectations that slowing growth and rising trade frictions will persist. According to ING’s head of commodities strategy, Warren Patterson, and commodities strategist Ewa Manthey, “the drive higher in gold this year has been fueled by the global trade war, geopolitical risks, and central banks adding to their reserves.” Indeed, central banks purchased 244 tonnes of gold in the first quarter of 2025, setting a new quarterly record.
However, the World Gold Council reported that net additions in April fell to 12 tonnes—12% lower than March’s 14 tonnes and well below the 12-month rolling average of 28 tonnes. Patterson and Manthey noted that “although central banks are still accumulating gold, the pace has decelerated as prices near all-time highs.” The April slowdown marked the second consecutive month of lower net purchases, suggesting that some reserve managers might be reconsidering the timing of large-scale allocations. Still, analysts expect central banks to persist in diversifying away from the US dollar, given ongoing trade disputes and monetary policy divergences.
The pound sterling edged up 0.1% versus the US dollar, trading near $1.3532 as markets braced for an afternoon of trade negotiations in Paris. At the same time, the US dollar index (DXY), which measures the greenback against a basket of six major currencies, remained virtually flat around 99.18—reflecting a broader hesitancy among investors to commit new directional bets ahead of potentially pivotal trade discussions.
With US Trade Representative Jamieson Greer scheduled to meet EU Trade Commissioner Maroš Šefčovič in Paris on June 4, 2025, markets focused on whether any breakthrough could ease tensions. The negotiations, which aim to address steel and aluminium duties as well as broader transatlantic trade frictions, come just days before the G7 summit in Canada—set for mid-June. Ahead of the summit, leaders from the United Kingdom, United States, Canada, France, Germany, Italy, and Japan are expected to outline their “best and final” trade proposals.
Neil Wilson, UK investor strategist at Saxo Markets, explained that “the key is whether there is a willingness to nail one’s colours to a trade deal with Washington before ongoing court cases are resolved. The US Court of International Trade’s ruling against Trump’s so-called ‘Liberation Day’ tariffs prolongs the uncertainty, yet markets appear to be adopting a glass-half-full outlook for now.” Wilson cautioned that if talks stall, President Trump might resort to additional tariff threats—or, per the emerging acronym “TACO” (“Trump Always Chickens Out”), potentially reverse course if domestic or political headwinds intensify.
Against the euro, sterling was relatively muted, trading near €1.188. Domestic factors in the UK—such as the Bank of England’s monetary policy outlook and lingering post-Brexit supply chain adjustments—appear to be priced in already. With UK inflation moderating toward the BoE’s 2% target and wage growth stabilizing, the central bank’s next rate decision, scheduled for later in June, is unlikely to surprise unless global growth indicators deteriorate sharply.
Oil prices moved lower on Wednesday morning as OPEC+ signaled plans to boost production, even as broader fears about global demand growth lingered. Brent crude for July 2025 delivery (symbol BZ=F) fell 0.3% to $63.98 per barrel, while West Texas Intermediate (WTI) for July (CL=F) declined 0.4% to $61.29 per barrel.
During their May meeting, OPEC+ members agreed to increase output by 500,000 barrels per day starting in July—aimed at countering rising US shale production and fulfilling incremental demand. However, recent data from the US Energy Information Administration (EIA) indicated a larger-than-expected drop in US crude inventories last week, suggesting that domestic production cuts or higher exports might be tightening the supply locally.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, argued that “oil markets are currently digesting OPEC+’s decision to boost supply, paired with lingering concerns over global growth and escalating trade tensions. Even though inventories fell more than anticipated, the backdrop of geopolitical risks—from the Russia-Ukraine conflict to potential disruptions in Iran and Canada—continues to provide a price floor.” The combination of supply-side uncertainty and demand-side caution left crude prices hovering within a narrow range.
Meanwhile, Europe’s benchmark FTSE 100 index (^FTSE) traded almost flat around 8,794 points on June 4, 2025. Investors in London remained cautious, mindful that multinational components of the index would feel the ripple effects of rising trade barriers, especially in steel and automotive-related sectors. With Brexit-related adjustments still ongoing, any protracted transatlantic spat could further weigh on export-oriented companies, offsetting gains from strong domestic fundamentals such as improved consumer spending and near-record employment levels.
With gold appreciating in response to trade uncertainties and a dimmer growth outlook, strategic allocation to precious metals may serve as a partial hedge against equity downside. Investors keen on mitigating risk can consider allocating 5%–10% of a balanced portfolio to physically backed gold or gold-based exchange-traded funds (ETFs).
Although central bank gold purchases have slowed, divergence between major monetary policies—especially between the US Federal Reserve, European Central Bank, and Bank of Japan—remains a key driver. Fed rate-cut expectations for late 2025 contrast with more dovish stances in Europe and Japan, which may keep the dollar firm in the near term. Watch statements from Fed officials ahead of the June 18 Federal Open Market Committee (FOMC) meeting for clues on US rate trajectory.
Given the pound’s slight uptick but persistent sensitivity to trade developments, traders might look for “carry” opportunities in GBP/USD if UK rates remain higher for longer relative to US yields. On the other hand, if trade talks in Paris stall and US tariffs remain in place, GBP could retreat toward technical support near $1.3500. Alternatively, GBP/EUR trading around €1.188 suggests limited room for sterling to outperform unless the BoE adopts a hawkish tilt or the Eurozone economic data deteriorates.
Oil market participants should brace for potential volatility as OPEC+ executes its supply increase. If global demand falters further—driven by lower manufacturing activity in Europe or weakening Chinese consumption—Brent could test $60 per barrel. Conversely, any flare-up in Middle Eastern tensions or unplanned supply disruptions could propel prices back toward $70. Maintaining flexible risk‐management strategies, such as buying out-of‐the‐money call options or incorporating dynamic stop-loss orders, may help navigate this uncertainty.
On June 4, 2025, gold’s rally, the pound’s cautious uptick, and oil’s modest pullback underlined how intertwined trade policy, economic growth projections, and geopolitical factors have become in today’s markets. With President Trump’s steel and aluminium tariffs now at 50% for most trading partners, and the OECD trimming global growth forecasts to 2.9% for both 2025 and 2026, investors are increasingly focused on portfolio insurance and tactical shifts. Central banks’ gold purchases—despite slowing in April—underscore a broader trend toward diversifying reserves away from the US dollar. Meanwhile, sterling’s movement in the lead-up to Paris trade talks and OPEC+’s output increase signal that both currency and energy markets remain finely balanced.
For investors, the prevailing environment argues for diversified positions: allocating to gold or related ETFs as a safe-haven play, monitoring central bank communications closely, managing FX exposures prudently, and adopting disciplined risk controls in the oil patch. While headline risks may persist over the coming weeks—ranging from G7 trade discussions to mid-June central bank meetings—those who combine strategic oversight with nimble execution will be better positioned to navigate potential volatility.
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