Gold price (XAU/USD) slips to approximately $2,795 in early Asian trading on Monday, pressured by a stronger US Dollar (USD) following fresh tariff announcements from US President Donald Trump.
Trump’s Tariffs Impacting Gold Prices
On Saturday, the United States confirmed a 25% tariff on Canadian and Mexican imports, while China faces a 10% tariff. Additionally, Canadian energy products will be taxed at 10%, as reported by CTV. These tariffs, set to take effect on Tuesday, have prompted Canada, Mexico, and China to announce countermeasures, fueling a broad USD rally and subsequently weighing on gold prices.
Factors Supporting Gold Prices
Despite the current downturn, several key factors could provide support for gold prices:
- Federal Reserve Rate Cuts: The Fed’s anticipated monetary easing cycle may increase demand for gold.
- Safe-Haven Demand: Economic uncertainty and trade tensions bolster investor interest in gold.
- Central Bank Purchases: Continued acquisitions by global central banks reinforce the metal’s value.
Prathamesh Mallya, DVP-Research at Angel One Ltd, noted that gold surged over 2% last week as investors sought refuge in safe-haven assets amidst market volatility and tariff-related concerns.
Gold’s Role as a Safe-Haven Asset
Historically, gold has served as both a store of value and a hedge against inflation. Beyond its appeal for jewelry, the precious metal remains a go-to investment in times of economic turbulence. Since gold is independent of any single issuer or government, it is widely regarded as a strong hedge against currency depreciation.
Key Takeaways for Investors
- Gold prices have dipped below $2,800 due to Trump’s tariffs and a rising USD.
- Federal Reserve policies and global economic concerns may offer future support.
- Gold remains a preferred safe-haven asset in times of financial instability.
As global markets react to the latest trade policies, investors should monitor gold price movements closely for potential buying opportunities in the near term.
