Gold prices climbed on Tuesday, hitting their highest level in more than two months, as a weakening U.S. dollar and investor concerns over Donald Trump’s trade policies fueled demand for the yellow metal.
Spot gold increased 0.6% to $2,722.83 per ounce by 0857 GMT, marking its highest level since November 6 and nearing its record peak of $2,790.15 set in October. Investors turned to gold as uncertainty around trade and economic policies under the Trump administration prompted a flight to safer assets.
Dollar Weakness Boosts Gold Demand
The U.S. dollar index (.DXY) slid 0.7%, staying close to a two-week low seen during the prior session. A weaker dollar generally makes gold more attractive for holders of other currencies, adding upward pressure on prices.
In the futures market, U.S. gold futures edged 0.5% lower to $2,734.20, narrowing the premium over spot prices. The move followed Trump’s decision to delay imposing tariffs on Monday, contrary to expectations. However, he hinted that tariffs on Canada and Mexico could still come into effect soon.
Continued Gold Surge Amid U.S. Policy Uncertainty and Economic Turmoil
Analysts believe gold’s upward momentum could continue, driven by unpredictability in U.S. policy. Julia Khandoshko, CEO at broker Mind Money, said, “The market is likely to benefit from the uncertainty of ‘Trump swings,’ and gold could reach $3,000 per ounce by mid-year.”
Gold’s role as a safe investment during economic and geopolitical turmoil has further solidified its appeal. Rhona O’Connell, an analyst at StoneX, noted, “The markets remain firmly in risk-off mode, so I would expect any gold price dips to catch bids.”
Inflation Fears Loom Over Markets
Trump’s policies, viewed as inflationary, could compel the Federal Reserve to keep interest rates higher for longer. While elevated rates typically weigh on gold by increasing the appeal of interest-bearing assets, persistent uncertainty has kept the metal in demand.
Other Precious Metals Experience Declines
Other precious metals had mixed performances:
- Spot silver slipped 0.27% to $30.41 per ounce.
- Palladium fell 0.7% to $935.55.
- Platinum declined 1.7% to $928.75.
Palladium and platinum, which are used by automakers to reduce engine emissions, were impacted by Trump’s latest policy decision. On Monday, he revoked a 2021 executive order from his predecessor Joe Biden that aimed to ensure half of all new vehicles sold in 2030 were electric.
O’Connell highlighted the broader hesitation in markets, stating, “If there were confidence in these policies, we’d likely see an upward blip, but instead, we’re in a ‘wait-and-see’ mode.”
