PT Rifan – Gold Down as Dollar Strength Outweighs Safe-haven Demand
Gold fell slightly after President Donald Trump imposed tariffs on imports from Canada, Mexico and China, with the surging dollar outweighing safe-haven demand as the world braces for a trade war.
Bullion traded near $2,790 an ounce, but remained close to a record high hit on Friday, while the U.S. currency gauge rose as much as 1%. The inflationary impact of tariffs between the world’s largest economies could keep borrowing costs high, a drag on non-interest-bearing bullion, while a stronger dollar makes it more expensive for many buyers.
The U.S. announced tariffs of 25% on goods from Canada and Mexico, and 10% on goods from China, which will take effect on Tuesday. Canadian energy imports will face a 10% levy. Ottawa unveiled 25% tariffs on U.S. goods, Mexico vowed retaliatory action and Beijing issued a statement vowing to “take appropriate countermeasures.” Trump also threatened tariffs on the European Union, which said it would respond forcefully.
A global trade war would be a major drag on growth, would force a reorganization of global supply chains, and threaten to destabilize financial markets around the world. While gold would typically benefit from safe-haven demand in such a scenario, the dollar’s ??moves and the outlook for interest rates offset those pressures. Some of the impact may already be priced in, with the precious metal up 6% so far this year, hitting a record high on Friday, following a 27% rally in 2024.
The Federal Reserve has “a sort of ‘watch and see’ mantra, and so I wouldn’t trade gold on a potential Fed reaction,” said Chris Weston, head of research at Pepperstone Group Ltd. “Gold is more of a play right now against worsening trade policy and higher frictions coming.” Spot gold fell 0.2% to $2,794.30 an ounce as of 8:03 a.m. in Singapore, after rising 1% last week. The Bloomberg Dollar Spot Index rose 0.9%, after rising 1% last week. Silver, platinum and palladium all fell.
Source: Bloomberg
Gold surges past $2,800 as tariff threats reignite record rally
Gold prices surpassed the key $2,800 mark for the first time on Friday, fuelled by a rush to safety following U.S. President Donald Trump’s tariff threats, which heightened concerns about global economic growth and inflationary pressures.
Spot gold rose 0.3% to $2,801.29 per ounce by 01:41 p.m. ET (1841 GMT), after hitting a record peak of $2,817.23 earlier in the session.
U.S. gold futures settled 0.4% lower at $2,835, trading a premium to spot gold rates.
“There’s a lot of uncertainty out there right now and also wait-and-see attitude on the geopolitical stage with tariffs,” said Bob Haberkorn, senior market strategist at RJO Futures.
Trump has set a Saturday deadline to slap a 25% tariff on imports from Canada and Mexico and said he was still considering new tariffs on Chinese goods.
Bullion, a preferred asset during times of economic and geopolitical turmoil, is on track to record its best monthly performance since March 2024, rising nearly 7% so far. The metal surpassed multiple record peaks last year.
Additionally, “the mixed signals we’re getting from the Fed and the Trump administration right now is causing uncertainty in the market … Trump wants to cut interest rates, while the Fed wants to hold them steady,” Haberkorn added.
Earlier this week, Federal Reserve Chair Jerome Powell said there would be no rush to cut interest rates again, contradicting Trump’s earlier calls saying he wants borrowing costs to be lowered.
U.S. prices increased in December while consumer spending surged, suggesting that the Fed could delay cutting interest rates for some time this year.
Among other metals, spot silver fell 0.8% to $31.42 after hitting an over one-month high on Thursday.
“We expect this strength in (silver) prices to attract subsequent discretionary trader interest, given this cohort remained nearly flat as of last week, with gold printing new all-time highs and the XAUXAG (gold-to-silver) ratio remaining at elevated levels,” TD Securities said in a note.
Platinum firmed 1% to $975.80, while palladium rose 2.2% to $1,011.
All three metals were headed for monthly gains. PT Rifan.
Source: Reuters