Gold prices rose on Monday, holding steady above $2,900 per ounce, driven by a softer U.S. dollar and growing concerns over a potential trade war after U.S. President Donald Trump threatened reciprocal tariffs.
As of 0950 GMT, spot gold had climbed 0.7% to $2,903.08, following a record high of $2,942.70 reached last week. U.S. gold futures rose by 0.5%, trading at $2,915.30. The U.S. dollar remained near a two-month low, making gold less expensive for buyers in other currencies.
Gold Benefiting from Safe-Haven Demand
UBS analyst Giovanni Staunovo attributed the gains to investors seeking safe-haven assets amid rising trade tensions. “Gold continues to benefit from concerns over tariffs and a potential trade war,” Staunovo said. “We continue to see upside for gold, with the metal expected to rise to $3,000, also supported by ongoing central bank demand.”
Trump reiterated his tariff threats on Friday, announcing that levies on automobiles would be imposed as soon as April 2, continuing his aggressive trade stance since taking office for a second term.
Geopolitical Tensions Impacting Gold
While the gold market was buoyed by trade concerns, Exinity Group chief market analyst Han Tan noted that progress in the ongoing Russia-Ukraine peace talks could temper some of gold’s recent gains. “Any advancement in peace negotiations could dampen some of gold’s year-to-date gains, though the precious metal still enjoys enough support to maintain higher spot prices,” Tan said.
Gold has traditionally been seen as a hedge against inflation and geopolitical uncertainties, though higher interest rates can reduce the appeal of non-yielding assets like bullion.
Interest Rate Outlook Influences Gold’s Direction
With the U.S. market closed for President’s Day, traders are keeping an eye on upcoming comments from Federal Reserve officials. Their remarks could provide crucial insights into the future direction of U.S. interest rates, which would directly impact gold’s price trajectory.
As geopolitical tensions and inflation concerns continue to drive demand for gold, the yellow metal remains well-positioned to sustain its upward momentum. However, the interplay between trade developments, interest rates, and peace talks will ultimately shape its short-term outlook.
Conclusion
Gold continues to show resilience, driven by a combination of geopolitical uncertainty, trade war concerns, and a weaker dollar. As the precious metal seeks to maintain its upward trajectory, key factors such as tariff developments, progress in Russia-Ukraine peace talks, and the Federal Reserve’s stance on interest rates will play a critical role in determining its next move. The outlook for gold remains positive, with potential for further gains, especially if central bank demand and safe-haven buying keep momentum strong in the coming weeks.