Gold Gains as Tariffs Stoke Economic Fears and Dollar Drops
Gold rose after last week’s sharp correction, with investors weighing the economic outlook as US President Donald Trump prepares to implement import levies against key trade partners.
Bullion traded above $2,870 an ounce on Monday, while a gauge of dollar’s strength against a basket of currencies fell. Trump is on the verge of hitting Canada and Mexico with 25% tariffs as soon as this week, and is planning on doubling a levy on China. There’s increasing concern the moves will undermine a US economy that already showing signs of cooling — a scenario which underscores the precious metal’s haven status.
Worries over economic growth have boosted market expectations for Federal Reserve interest-rate cuts, which would also add to bullion’s appeal as a non-yielding asset.
At the same time, concerns remain that Trump’s proposed tariffs will keep price pressures elevated — a view that saw the dollar surge last week. A stronger greenback makes dollar-denominated gold more expensive for foreign investors.
Recent US data has stoked fears the US may be entering a period of stagflation, when an economy faces both tepid growth and elevated prices. That could support gold, an asset regarded as a store of value in uncertain times.
Spot gold rose 0.5% to $2,873.03 an ounce at 11:44 a.m. in London, after ending last week 2.7% lower. The Bloomberg Dollar Spot Index eased 0.4%. Silver, palladium and platinum all gained.
Source : Bloomberg
