Gold Steady Amid Trump Trade War Threats, US Data
Gold held gains, as traders balanced diminishing prospects for aggressive US interest rate cuts in 2025 against rising demand for safe-haven assets amid concerns that Donald Trump’s return to the White House could trigger a global trade war.
Bullion traded near $2,650 an ounce, having risen as much as 1.1% on Tuesday before paring gains. A selloff in Treasuries weighed on the metal, after a report showing stronger US business activity helped reinforce views that the Federal Reserve will take a cautious approach to monetary easing this year. Higher borrowing costs tend to be a drag on bullion, which pays no interest.
At the same time, traders were watching a news conference from Trump on Tuesday in which he called on the US to absorb Canada, and take over the Panama Canal and Greenland. He did not explain how he would fulfill those promises, other than threatening to impose tariffs on countries that do not cooperate.
“It feels like gold will be a solid hedge not only against Trump’s upcoming tariffs,” but also against possible retaliatory measures from other countries in response to the new duties, Pepperstone Group Ltd. head of research Chris Weston said in a note. Those actions have not been priced in by the market, meaning “volatility across assets could spike” and support bullion, he added.
Elsewhere, China’s central bank said Tuesday it added to its gold reserves for a second month in December in a positive sign for bullion.
Bullion surged 27% last year at a record high, driven in part by U.S. monetary easing, though the rally lost momentum after Trump’s U.S. election victory buoyed the dollar. Investors are now facing less impressive gains this year, with Goldman Sachs Group Inc. this week delaying its target for gold to reach $3,000 an ounce to mid-2026 on expectations of fewer Fed rate cuts.
Spot gold edged up 0.1% to $2,650.15 an ounce at 8:58 a.m. in Singapore. The Bloomberg Dollar Spot Index rose 0.1%, after rising 0.2% in the previous session. Silver rose, while platinum and palladium fell. Source: Bloomberg
