Gold Strengthens as Market Weighs Risks of US Tariffs and Iran Tensions
Gold prices strengthened on Wednesday, boosting demand for safe haven assets amidst the threat of US import tariffs and geopolitical risks in the Middle East. Gold briefly rose by around 1%, paring losses after dropping 1.6% in the previous session, as the US dollar weakened and markets focused on US military developments ahead of the resumption of nuclear talks with Iran this week.
Gold also supported US trade policy. A 10% across-the-board import tariff officially took effect on Tuesday after a Supreme Court ruling invalidated the previous "reciprocal" tariff scheme. Although President Donald Trump threatened to raise the tariff to 15%, there has been no official direction on that increase. The US government is also preparing a national security investigation into imports of several commodities, such as batteries and industrial chemicals, which is considered to open the door to additional tariffs.
On the fiscal side, the market is also monitoring the potential impact of tariff refund requests by some importers. Several analysts believe the refund process will impact the US budget deficit, dollar movements, and the government bond market—conditions that reinforce the "debasement trade" narrative, as investors shift portfolios from bonds and currencies to hard assets like gold. After a sharp correction at the start of the month, gold has regained its footing above $5,000/oz and has recovered more than half of the losses from the extreme sell-off at the turn of the month.
However, interest rates remain a balancing factor. The prospect of the Fed holding rates in the near term could be a headwind for gold, as the precious metal doesn't offer unbalanced returns. Boston Fed President Susan Collins stated that interest rates are likely to remain unchanged "for some time" following improving US labor market data, in line with the Fed's January meeting minutes, which indicated caution about cutting rates.
At 11:03 a.m. Singapore time, gold rose 0.9% to $5,187.52/oz. Silver jumped 2.9% to $89.67, while platinum rose 2.7% and palladium gained 1.2%. The Bloomberg spot dollar index fell 0.2%, also providing room for precious metals to strengthen. (asd)
Source: Newsmaker.id
