UOB keeps positive gold outlook despite US tariff confusion
Its head of markets strategy Heng Koon How said uncertainty arose after the US Customs and Border Protection updated the Harmonised System code for importing gold kilo bars and 100-ounce bars.
These bars, widely used in Comex futures settlement, could potentially no longer be tariff-exempt under the new classification.
"There was much confusion and concern over the supposed change, which could result in these bullion bars being subjected to import tariffs," Heng said in a note.
He added that given the large amount of gold the US imports from Switzerland, the move could be linked to ongoing trade tensions between the two countries.
Industry players have warned the measure could tighten bullion supply and inject volatility into the US gold futures market. UOB also noted concerns that supply disruptions might even threaten the viability of Comex gold futures contracts.
Swiss Association of Manufacturers and Traders in Precious Metals president Christoph Wild said, "With a tariff of 39 per cent, exports of gold bars will definitely be stopped to the US."
Despite the market anxiety, Heng said UOB's positive view on gold remains unchanged, supported by strong central bank demand, a weaker US dollar and expectations of US Federal Reserve rate cuts.
"We keep to our gold forecast of US$3,500 per ounce by the fourth quarter of 2025 and US$3,700 per ounce by the second quarter of 2026," Heng said, adding that spot gold is currently just under US$3,400 per ounce.
He added that the upcoming resumption of the Fed's rate-cutting cycle at the September Federal Open Market Committee meeting would reinforce the weak dollar backdrop, which is positive for gold prices.
While the White House is expected to issue a clarification soon, Heng cautioned that "nerves are frayed and the bullion market will likely stay tight with investors remaining wary of further tariff risk."
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
2 days ago
- The Star
Domestic markets face volatile fund flows
PETALING JAYA: Fund flows into local capital markets are expected to remain volatile as investors focus on looming US sectoral tariffs on Malaysia's pharmaceutical and semiconductor goods. United Overseas Bank (M) Bhd (UOB) expects capital flows into Malaysia and other emerging markets to remain volatile, with investors continuing to rotate their funds across sectors based on each country's resilience to US tariffs and shifts in trade policy. UOB said investor attention is now turning to sector-specific levies by the United States and a potential 10% surcharge on Brics member countries and their allies. 'Other key near-term issues include US-China trade negotiations, the US Federal Reserve's policy independence and its rate trajectory,' UOB said in a research note. UOB added that lingering tariff and trade uncertainties would continue to weigh on the ringgit till the end of the year before the currency regains strength from the first quarter of next year (1Q26). UOB projects the ringgit strengthening against the US dollar to RM4.19 in 2Q26 from RM4.20 in 1Q26 and RM4.23 in 4Q25 and RM4.27 in 3Q25. Analysts noted that July was the second consecutive month foreign investors continued to pare their holdings of Malaysian equities and debt. In its weekly fund-flow report, MBSB Research said foreign fund outflows from Bursa Malaysia in July had extended into August. In the week ended Aug 8, foreign investors extended their net selling of Malaysian equities to fifth consecutive week, registering a net outflow of RM1.14bil. This was three times higher than the previous week's outflow of RM378.1mil. Foreign investors were net sellers on every trading day, with outflows ranging from RM145.6mil to RM318.1mil. 'The largest outflow was recorded last Tuesday, followed by last Thursday with RM291mil, last Monday with RM205.7mil and last Wednesday with RM174.7mil, while last Friday recorded the smallest outflow. 'The only two sectors that recorded net foreign inflows last week were industrial products and services (RM62.7mil) and transportation and logistics (RM36.2mil). 'The top three sectors that recorded the highest net foreign outflows were financial services (RM344.3mil), healthcare (RM239.1mil) and utilities (RM210.2mil),' said MBSB Research. The selling pressure is also present in bonds. Maybank Investment Bank Research (Maybank IB) said moderate selling of ringgit bonds continued in July for a second consecutive month, driven in part by a rebound in the greenback. Outflows totalled RM5.5bil from June's RM5.4bil, although on a year-to-date basis, flows stayed positive at RM15.9bil from a peak of RM26.9bil in May. Maybank IB said foreign holdings of Malaysian Government Securities and Government Investment Issues eased to 21.1% in July from 21.8% in June, while across Asean the picture was mixed, with Indonesia attracting inflows and Thailand experiencing outflows.
BusinessToday
3 days ago
- BusinessToday
STI Opens Flat Amid Cautious Trade; UOB Leads Early Gains
The Straits Times Index (STI) edged up 0.16 points to 4,239.99 as of 9.26 am on Monday, with market sentiment appearing cautious despite more advancers than decliners in early trade. Turnover stood at 276.14 million securities worth S$303.33 million, with 131 counters rising, 104 declining and the rest unchanged. Among blue chips, United Overseas Bank (UOB) led early gains, rising 0.64 per cent to S$35.93. Other actively traded stocks included DBS at S$50.96, OCBC Bank at S$16.91 and Singtel at S$3.94. Industrial names were mixed, with Yangzijiang Shipbuilding flat at S$2.89, Sembcorp Industries steady at S$6.53 and Singapore Airlines unchanged at S$6.55. Key sector indices also showed a muted start, with the iEdge S-REIT Leaders Index at 1,067.45 and the iEdge Southeast Asia+ Tech Index at 4,473.09.
The Star
3 days ago
- The Star
Gold futures likely to track Comex ahead of American CPI data this week
KUALA LUMPUR: Gold futures on Bursa Malaysia Derivatives are set to take their cue from the US Comex gold market ahead of the upcoming release of the US consumer price index or CPI data for July, scheduled for tomorrow. The release is expected to intensify the debate among US Federal Reserve members over the direction of US interest rates in September. In a research note, RHB Research said gold futures will likely remain bullish this week, with analysts projecting a possible break above the US$3,450 per ounce resistance level, potentially pushing prices towards the US$3,500 per ounce mark. 'In a bullish market setup, resistance levels tend to be weaker. We expect immediate support to emerge at the US$3,350 per ounce level,' it said. The research house said traders are advised to retain long positions initiated at US$3,402.40 per troy ounce. 'To manage the downside risks, the stop-loss threshold is fixed at US$3,150 per ounce,' it added. On a weekly basis, the spot-month August contract increased to US$3,415.80 per ounce last Friday from US$3,310.40 a week earlier, the September contract improved to US$3,421.50 per ounce from US$3,316.30 previously, while October strengthened to US$3,451.50 per ounce from US$3,345.40, and November advanced to US$3,468.90 per ounce from US$3,362.80. — Bernama
