Dollar Weakness Offers Brief Relief to Gold Amid Trade Tariff Speculation
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Gold prices saw little movement during Asian trading on Tuesday as speculation grew about potential trade tariffs under U.S. President-elect Donald Trump. However, a recent dip in the U.S. dollar provided slight support to the yellow metal.
Gold had faced losses in December due to profit-taking and expectations of a slower pace of Federal Reserve interest rate cuts in 2025. The dollar’s strength, which hit over two-year highs, weighed heavily on gold prices. On Monday, the dollar eased from those highs, providing some relief.
Spot gold edged up 0.1% to $2,638.05 per ounce, while February gold futures also gained 0.1% to trade at $2,649.19 per ounce by 23:30 ET (04:30 GMT).
Trump’s Trade Tariff Plans Stir Uncertainty
On Monday, Trump denied a Washington Post report suggesting his administration would focus trade tariffs only on critical imports. He has previously vowed to impose steep tariffs, particularly targeting China, to bolster U.S. trade dominance.
The mixed messages have heightened uncertainty regarding Trump’s trade policies. While the dollar initially fell to a one-week low after the report, it later regained much of its losses.
The weaker dollar provided limited relief for gold, which continues to face pressure from expectations of slower rate cuts in 2025. Hawkish comments from Federal Reserve officials over the weekend reinforced this outlook.
Goldman Sachs (NYSE: GS) projected gold would reach $3,000 an ounce by mid-2026, after failing to hit that level in 2024. The bank expects gold to end 2025 at approximately $2,900 per ounce.
Higher interest rates typically weigh on gold and other metals by increasing the opportunity cost of holding non-yielding assets.
Performance of Other Precious Metals
Other precious metals showed mixed performance on Tuesday. Platinum futures rose 0.4% to $949.50 per ounce, while silver futures remained steady at $30.573 per ounce.
Copper Prices Hold Steady with Focus on China
In industrial metals, copper prices remained stable after recent gains, driven by hopes of additional economic stimulus from China, the world’s largest copper importer.
Benchmark copper futures on the London Metal Exchange rose 0.2% to $8,983.50 per ton, while March copper futures held steady at $4.1540 per pound.
Copper prices climbed on Monday as investors anticipated that China’s economic challenges and U.S. trade headwinds would push Beijing to implement more robust growth measures.
China’s upcoming consumer price index inflation data is expected to provide further insights into the country’s economic trajectory.
Outside China, copper received mixed signals from moderate purchasing managers index data in the U.S. and eurozone, which indicated subdued business activity in December.
Paraphrasing text from "Investing.com" all rights reserved by the original author.
