Gold prices rose on Monday as the dollar weakened to near its two-month low, with investors awaiting additional details on U.S. President Donald Trump’s reciprocal tariff plans which is expected to escalate global trade tensions.
In the UAE, gold rates increased, with 24-carat gold gaining AED1.75 to AED349.5 and 22-carat gold rising AED1.5 to AED325. Meanwhile, 21-carat gold increased by AED1.5 to AED311.75 and 18-carat gold inched up AED1.25 to AED267.25.
Globally, spot gold climbed 0.40 percent to $2,895.49 per ounce, as of 6:51 GMT. Gold hit a new record high of $2,942.70 last week. Meanwhile, U.S. gold futures gained 0.34 percent to $2,910.7.
Dollar weakness supports bullion
The U.S. dollar index gained 0.02 percent to 106.74, hovering near its two-month low as traders assessed recent weaker-than-expected U.S. economic data. A weaker dollar makes bullion more affordable for other currency holders.
The U.S. dollar fell to near its lowest level since December 17 in reaction to disappointing U.S. retail sales data on Friday which helped revive demand for gold and further support prices. The U.S. Census Bureau reported that retail sales declined by 0.9 percent in January following a 0.7 percent increase in December.
Markets were quick to react and are now pricing in a rate cut by the Federal Reserve in September, rather than at the end of the year, further supporting bullion. Kevin Hassett, director of the U.S. National Economic Council (NEC) said that a 40 basis points drop in 10-year U.S. Treasury yield could be a sign the market expects lower inflation.
Last week, Fed Chair Jerome Powell told U.S. lawmakers that the battle with rising prices wasn’t done yet and any further interest rate cuts would have to wait until it was clear inflation would return to the 2 percent target. The Atlanta Fed President noted that the labor market is performing incredibly well and the GDP is more resilient than expected but the latest inflation numbers show careful monitoring is still needed.
Tariff threats raise safe-haven demand
Gold prices are receiving support from several factors including the dollar’s weakness and uncertainty over how Trump will handle enforcing his trade tariff policy on major trade partners.
The president renewed his tariff threats on Friday, saying that charges on automobiles would be imposed as early as April 2. Last week, Trump instructed commerce and economic officials to study reciprocal tariffs against countries that impose tariffs on U.S. goods, with recommendations due by April 1. This plan targets several countries including China, Japan, South Korea and the European Union.
This announcement propelled gold prices last week amid rising trade war concerns which could potentially impact global economies.
Negotiations to end Russia-Ukraine war
U.S. Secretary of State Marco Rubio said on Sunday that Ukraine and Europe would be part of any real negotiations to end Moscow’s war. Prospects of a peace deal between Russia and Ukraine would decrease safe-haven buying, which will likely impact the rise in gold prices. However, with Trump’s tariff plan and inflation risks persisting, gold prices could still rally.
Gold is viewed as a traditional hedge against rising prices and geopolitical uncertainties.
Read: Oil prices steady at $74.76 as Trump tariffs loom, Russia-Ukraine peace talks emerge
Other precious metals
As gold prices rose, the precious metals market saw mixed movement on Monday. Spot silver fell 0.20 percent to $32.07 per ounce, while platinum gained 0.55 percent to $984.90 and palladium rose 0.94 percent to $970.25.
