Gold prices rose on Tuesday after dropping more than 3 percent in the previous session, driven by president-elect Donald Trump’s proposed tariffs on all imports from Canada, Mexico, and China.
In the UAE, gold rates slipped, with 24-carat gold declining by AED5.5 to AED318 and 22-carat gold losing AED5.25 to AED294.50. Meanwhile, 21-carat gold fell AED5 to AED285 and 18-carat gold dipped AED4.25 to AED244.25.
Globally, spot gold rose 0.17 percent to $2,621.89 per ounce, as of 6:56 GMT, recovering some losses from earlier in the session when prices hit their lowest since November 18. Meanwhile, U.S. gold futures gained 0.19 percent to $2,647.65.
Safe-haven demand remains
Despite the sharp decline in the previous session and early in today’s session, gold prices held their ground, signaling some safe-haven demand. With Trump back in focus, the precious metals market may see some uncertainty ahead.
Trump vowed to impose a 25 percent tariff on all products coming into the U.S. from Mexico and Canada and an additional 10 percent tariff on all Chinese imports, driving some haven flows and providing a modest uptick for gold prices.
Gold is traditionally considered a safe-haven investment during economic and geopolitical uncertainty, including trade wars and other regional conflicts.
The optimism over Scott Bessent’s nomination as the U.S. Treasury secretary and the Israel-Lebanon ceasefire deal weighed heavily on safe-haven gold at the start of a new week. Hopes that Bessent will take a more phased approach on tariffs in an attempt to rein in the budget deficit triggered a sharp fall in the U.S. Treasury bond yields and undermined the U.S. dollar.
Fed rate cuts
In addition, the growing market concern that Trump’s policies will refuel inflation and force the Federal Reserve to cut interest rates slowly triggered a rise in U.S. Treasury bond yields. This helped the U.S. dollar regain some positive traction, further undermining gold prices and making them more expensive for other currency holders.
Chicago Fed president Austan Goolsbee said on Monday that, barring some convincing evidence of overheating, he foresees the central bank continuing to lower rates. Meanwhile, Minneapolis Fed president Neel Kashkari said that it is still appropriate to consider another rate cut at the December FOMC policy meeting.
Traders, however, continue scaling back their bets for another 25-basis-points Fed rate cut in December amid expectations that Trump’s policies will boost inflation. According to the CME FedWatch Tool, markets currently estimate a 56.2 percent chance of a 25-basis-point U.S. Federal Reserve rate cut in December.
Traders will look out for U.S. consumer confidence data and the minutes from the Fed’s November meeting later today, as well as the first revision of GDP and core PCE figures later this week.
On the geopolitical front, U.S. President Joe Biden and French President Emmanuel Macron are set to announce a ceasefire in Lebanon between Hezbollah and Israel, according to four senior Lebanese sources.
Read: Oil prices remain near 2-week high on supply risks
Other precious metals
The precious metals market saw mixed movement on Tuesday as gold prices recovered some of their losses. Spot silver lost 0.05 percent to $30.28 while platinum fell 0.29 percent to $936.07. However, palladium gained 0.06 percent to $973.62.
