Gold prices increased on Tuesday as investor interest in the yellow metal’s safe-haven status was enhanced by the introduction of new tariffs by U.S. President Donald Trump.
In the UAE, gold rates edged down by AED1.25 today, with 24-carat gold priced at AED350.75 and 22-carat gold at AED326.25. Additionally, 21-carat gold also decreased by AED1.25 to AED314.25, while 18-carat gold is at AED269.25.
By 07:08 ET (12:08 GMT), spot gold had climbed by 1.0 percent to $2,920.81 an ounce, marking a continuation of gains into a second consecutive session. Gold futures rose by 1.1 percent to $2,931.49.
Bullion has surged by approximately 10 percent so far this year. Gold even reached an all-time high of $2,956.15 on February 24, although analysts at UBS observed that the metal experienced a slight decline as the month drew to a close, primarily due to profit-taking and “well-telegraphed” challenges in the U.S. and U.K. regarding the availability of gold bars.
“Investors must have filled their bathtub by now (with gold)” is a comment I often hear, and while momentum and price strength have supported buying, activity across the exchange-traded funds and the COMEX futures market paints a different picture. While demand for bullion-backed ETFs has risen in the past month, total holdings at 85.8 million ounces remain well below the recent 2022 peak at 107 million. Leveraged speculators in the futures, meanwhile, have recently been net sellers, and in the week to 25 February, they held a net long of 26.7 million ounces, within the range seen during the last ten months,” remarked Ole Hansen, head of Commodity Strategy, Saxo Bank, to Economy Middle East.
Tariffs in focus
Trump’s tariffs on products from Canada, Mexico, and China took effect just after midnight Eastern time on Tuesday. The levies, which include a 25 percent fee on all imports from Mexico and non-energy goods from Canada, were “all set” to proceed, Trump stated on Monday. A 10 percent surcharge will also be applied to Canadian energy.
China faced a 10 percent import duty, in addition to an earlier 10 percent trade tax that went into effect in February.
America’s southern and northern neighbors previously rushed to meet Trump’s demands for enhanced border security to curb the flow of the illegal drug fentanyl and migrants into the U.S. Concessions made in February resulted in a month-long delay of the duties.
Nevertheless, Trump remarked that the countries had not done enough to meet his expectations, asserting that there was “no room left” for an agreement. He also indicated that China had not taken “adequate steps to alleviate the illicit drug crisis.”
Read more: UAE gold prices drop AED3.5, global rates fall ahead of PCE inflation data
Economic implications of tariffs
Economists and business leaders have long contended that the tariffs on Canada and Mexico—responsible for $900 billion in annual U.S. imports—could disrupt a highly integrated North American economy. Together with China, Canada and Mexico account for over 40 percent of total U.S. imports.
Canada’s Prime Minister Justin Trudeau announced that Ottawa would respond to Trump’s tariffs by implementing its own 25 percent levy on approximately $20 billion in U.S. goods. Initially, Trudeau indicated that the measures would target specific items such as American beer, bourbon, wine, orange juice, and home appliances. Should the U.S. tariffs remain in effect for 21 days, another duty on about $86 billion in American goods would follow, Trudeau stated.
Read more: UAE gold prices rise AED2.5, global rates fall amid Trump tariff caution
“Tariffs will disrupt an incredibly successful trading relationship,” Trudeau remarked, adding that Americans will ultimately pay more for items like groceries and gas because of these measures.
Mexican leader Claudia Sheinbaum mentioned that the country has a “plan B, C, D” to respond to the tariffs, though no immediate actions were announced. Meanwhile, China has indicated it would implement additional 10 percent to 15 percent tariffs on certain U.S. imports starting March 10, labeling Trump’s tariffs as “unreasonable and groundless.”
