Gold prices climbed toward $3,350 during the early Asian session on Tuesday. The precious metal is gaining traction amid safe-haven demand following U.S. President Donald Trump’s threat of 100 percent tariffs on Russia. Market participants are closely monitoring the U.S. Consumer Price Index (CPI) inflation data, expected later today.
In Dubai, gold rates saw an uptick, with 24-carat gold rising AED0.81 to AED405.31, while 22-carat gold also increased by AED0.76 to AED375.26. Additionally, 21-carat gold saw a boost of AED0.81 to AED358.19, and 18-carat gold climbed AED0.73 to AED307.02.
Spot gold was up 0.23 percent at $3,357.89 per ounce as of 01:34 GMT. U.S. gold futures rose 0.31 percent to $3,370.30.
Late on Monday, Trump threatened to impose 100 percent tariffs on Russia unless President Vladimir Putin agrees to a deal to end the invasion of Ukraine within 50 days. The U.S. President noted that these levies would be in the form of secondary tariffs, although he did not provide further details. Geopolitical risks could elevate the gold price, a traditional safe-haven asset, in the near term.
Fed’s cautious stance may dampen gold’s appeal
However, the cautious stance of the U.S. Federal Reserve (Fed) may dampen the appeal of the yellow metal. Fed Chair Jerome Powell indicated that he anticipates inflation to rise this summer due to tariffs, which may keep the U.S. central bank on hold until later in the year.
Meanwhile, Chicago Fed President Austan Goolsbee remarked that the new tariffs announced by Trump have complicated the inflation outlook, making it more challenging for him to support the rate cuts that the President has advocated.
Gold traders are awaiting the U.S. CPI data later today, as it may provide insights into the future trajectory of U.S. interest rates. Economists predict a slight uptick in U.S. inflation for the previous month. Nevertheless, any indications of softer-than-expected inflation could raise expectations for Fed rate cuts, supporting the non-yielding gold price.
On Monday, gold prices reached a three-week high, buoyed by safe-haven demand after U.S. President Donald Trump threatened a 30 percent tariff on imports from the European Union and Mexico.
Trump warned on Saturday of a 30 percent tariff on imports from Mexico and the European Union, effective August 1, following unsuccessful negotiations with these significant U.S. trading partners. Both the European Union and Mexico described the tariffs as unfair and disruptive, while the EU announced it would extend its suspension of countermeasures to U.S. tariffs until early August and continue to push for a negotiated resolution.
