Dollar and Gold Surge as Tariff Threats Unfold, Crypto Market Faces Largest Sell Pressure Yet

• The U.S. dollar and gold rose as President Trump’s 25% tariff threats sparked market reactions.
• Cryptocurrencies, including Bitcoin and Ethereum, declined due to concerns over inflation and higher interest rates.
• The cryptocurrency market faces the largest sell pressure since the collapse of Three Arrows Capital.

The U.S. dollar is showing strength, buoyed by President Donald Trump’s recent announcement of 25% tariffs on steel and aluminum imports.

The move has reignited trade tensions and brought inflation risks into sharper focus, sending the dollar to new highs.

Simultaneously, gold has demonstrated resilience, surpassing $2,900 per ounce, while the crypto market, including Bitcoin (BTC) and Ethereum (ETH), has faced declines.

Dollar Strengthens Amid Tariff Concerns

The dollar gained ground after Trump’s tariff pledge, with the DXY index climbing for a third consecutive day to 108.1.

As trade talks show signs of stalling, the strong U.S. economic backdrop—characterized by growth, high inflation, and a hawkish Federal Reserve—continues to support a bullish outlook for the dollar.

Other currencies are feeling the impact. The Japanese yen is the worst performer among major currencies, with USD/JPY approaching 152.15.

Canada, the U.S.’s largest steel and aluminum supplier, has also seen its currency weaken. The British pound and the euro both trade lower, at $1.2410 and $1.0330, respectively.

In the wake of the renewed tariff discussions, the outlook for further rate hikes from the Federal Reserve has become clearer, putting additional upward pressure on the dollar.

Gold Hits New Highs Amid Trade Tensions

Gold has remained a safe haven, rising to new record highs as traders seek refuge from the uncertainties caused by tariff threats.

The precious metal surpassed $2,900 per ounce, with its upward momentum continuing despite mixed U.S. labor data.

While the job market remains strong, with low unemployment and wage growth, there are concerns that inflation could persist, keeping the Fed on a tightening path.

The persistent trade tensions, coupled with rising inflation fears, have helped gold maintain its bullish trend.

As the tariff talks intensify, gold is expected to remain in demand, with some investors speculating that the precious metal could hit the psychologically significant $3,000 per ounce mark.

Cryptocurrency Market Reacts to Tariff Threats

The tariff announcements have dampened sentiment in the cryptocurrency market, with both BTC and ETH experiencing declines.

Over the past 24 hours, Bitcoin has dropped by 1%, while Ethereum has fallen by 1.8%. Other major cryptocurrencies like XRP, Cardano (ADA), and Solana (SOL) have also faced downward pressure.

The reason for the pullback lies in the inflationary impact of tariffs. Higher import costs could push inflation up, forcing the Federal Reserve to maintain or even raise interest rates.

As risk assets, Bitcoin and Ethereum tend to thrive in low-interest-rate environments, so concerns about prolonged higher rates have negatively impacted their performance.

Despite this, Bitcoin ETFs continue to attract investor interest, with $171.2 million in net inflows recorded last Friday. However, a closer look at positioning data reveals that more positions were closed than opened, suggesting a weakening trend or declining market activity.

Market Outlook: Tariff Fatigue and Gold’s Potential Rally

While the markets have reacted to Trump’s tariff threats, some analysts suggest that investors may be growing accustomed to the risks.

Kathleen Brooks, research director at XTB, noted that Bitcoin has been moving in lockstep with the stock market in recent weeks, particularly tech stocks, which could signal a broader market resilience to tariffs.

Brooks pointed out that global equity indices have been higher at the start of the week, suggesting that markets may be showing signs of “tariff fatigue.” As the tariffs target specific products rather than entire countries, the potential for swift negotiations remains uncertain.

One area that could benefit from the tariff backdrop is gold. Analysts expect continued demand for the metal, especially if Trump’s administration expands tariffs to include precious metals. This could further drive gold prices higher, potentially setting the stage for a surge past $3,000 per ounce.

The Road Ahead

As markets continue to digest the implications of Trump’s tariff announcement, investors will be closely monitoring how these policies play out.

The strong dollar, rising gold prices, and a struggling cryptocurrency market all point to a complex and unpredictable economic environment.

For now, the focus remains on inflation, interest rates, and the global trade landscape.

While the U.S. dollar may benefit in the short term, gold appears to be the ultimate beneficiary of the uncertainty surrounding tariffs.

Meanwhile, Bitcoin and other cryptocurrencies are likely to remain sensitive to any changes in U.S. monetary policy and inflation expectations.