Gold Prices Surge As Investors Seek Safety Amid Trade Policy Uncertainty
Gold prices rose amid a weaker US Dollar (USD) as the trade war between the United States (US), Canada, Mexico, and China escalated with new tariffs coming into effect on Tuesday. Hence, a weaker USD supported the precious metal. XAU/USD was trading at $2,918, up 0.62%.
Market sentiment remained sour after 25% tariffs on Canada and Mexico and 10% additional duties on China came into effect around midnight. As a result, traders seeking safety pushed Gold Bullion prices higher on rising demand, while the Greenback declined across the board.
Meanwhile, recently revealed US data fueled recession fears. The Atlanta Fed Now GDP model projected Gross Domestic Product (GDP) for Q1 2025 at -2.8%, down from 1.6% estimated on Monday.
On Monday, the February ISM readings and the S&P Global Manufacturing PMI were mixed. The former slowed down near the 50 expansion/contraction threshold, while the latter expanded solidly. US Treasury yields fell on the data as traders started pricing in a Federal Reserve (Fed) rate cut.
Hence, traders seeking safety bought Gold Bullion pushing prices closer to $2,900.
Gold traders’ focus shifts to the release of ISM Services PMI, Initial Jobless Claims, and February Nonfarm Payrolls data.
Source: FXStreet
