Gold prices have surged to near three-month highs, driven by a weakening dollar and uncertainties surrounding U.S. President Donald Trump’s policy proposals, which raise concerns about potential trade wars and increased market volatility.
Key Highlights:
Current Gold Prices:
Spot gold (XAU) rose by 0.4% to $2,755.20 per ounce as of 02:29 p.m. ET (1629 GMT), approaching its all-time high of $2,790.15 reached on October 31.
U.S. gold futures (GCcv1) also settled 0.4% higher at $2,770.90.
Dollar Weakness:
The dollar index (.DXY) fell to its lowest level in over three weeks, making gold, priced in dollars, less expensive for international buyers.
Investor Sentiment:
According to Ryan McIntyre, senior portfolio manager at Sprott Asset Management, “Gold typically does well when there’s a large or even a moderate amount of uncertainty in the market,” making it a preferred investment during turbulent times.
Trump’s Tariff Proposals:
On February 1, Trump mentioned discussions about imposing a 10% tariff on goods imported from China, while also suggesting potential 25% tariffs on imports from Mexico and Canada. However, details remain vague, leaving investors uncertain about the implications.
Inflationary Concerns:
Trump’s proposed tariffs are viewed as inflationary, which could lead the U.S. Federal Reserve to maintain higher interest rates longer to combat rising prices.
Market Reactions:
Tai Wong, an independent metals trader, noted that Trump’s slightly less aggressive stance on tariffs has provided some relief, suggesting that lower tariffs could indicate reduced inflation and the potential for more rate cuts.