Gold Declines as Strength in Dollar Outweighs Haven Demand
Gold fell after President Donald Trump imposed tariffs on imports from Canada, Mexico and China, with a surging dollar outweighing haven demand as the world braces for trade wars.
Bullion dipped below $2,790 a dollar, although was still fairly close to a record high reached on Friday. A gauge of the US currency jumped the most in almost three months on an intraday basis.
The inflationary impact of tariffs between the world’s biggest economies may keep borrowing costs elevated, a headwind for gold that doesn’t offer any interest, while a rising dollar makes it pricier for many buyers.
“Those dynamics are overwhelming haven demand for now,” said Christopher Wong, a strategist at Oversea-Chinese Banking Corp, adding that an uptick in price pressures may impact the Federal Reserve’s easing cycle. “But if trade tensions intensify with more tit-for-tat measures, then we may start to see demand for gold pick up again.”
Source: Bloomberg