Gold Gains on Softer Dollar as Investors Weigh Trump Tariff Impact

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)
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Gold Gains on Softer Dollar as Investors Weigh Trump Tariff Impact

Gold bullion displayed in a store in the German city of Pforzheim (dpa)
Gold bullion displayed in a store in the German city of Pforzheim (dpa)

Gold prices rose on Tuesday, helped by a softer US dollar and inflationary risks posed by President-elect Donald Trump's potential tariff policies, which could influence the pace of Federal Reserve monetary policy easing this year.

Spot gold was up 0.3% to $2,668.79 per ounce as of 1200 GMT. US gold futures gained 0.1% to $2,682.30.

"Gold prices are benefiting from reports that the incoming Trump administration is considering a gradual implementation of tariff increases to mitigate their impact on inflation," said Ricardo Evangelista, senior analyst at ActivTrades, referring to a Bloomberg report.

"This news led to a slight decline in US Treasury yields and a weakening of the dollar."

The dollar index fell 0.3% from a more than two-year high hit in the last session as traders scaled back US rate cut bets for 2025 after a strong jobs report. A softer dollar makes gold more affordable for buyers using other currencies, Reuters reported.

Investors are looking out for US Producer Price Index (PPI) data at 1330 GMT and Consumer Price Index (CPI) numbers due on Wednesday. A Reuters poll of economists gives a median forecast for an annual rise in CPI of 2.9%, up from November's 2.7%.

Also due is US retail sales on Thursday for further insights into the economy and the Fed's 2025 policy trajectory.

"If inflation increases again based on Trump´s spending policy, we may even see no cuts at all in the mid-term," said Henrik Marx, head of precious metals trading at Heraeus Precious Metals Germany.

Bullion is used as a hedge against inflation, although higher interest rates reduce the non-yielding asset's appeal.

Elsewhere, spot platinum was down 0.4% to $949.80.

"We look for platinum to be under-supplied by 500,000 ounces, or 6.4% of demand, in 2025," UBS said in a note.

Spot silver firmed 0.5% to $29.75 per ounce and palladium climbed 0.5% to $943.70.



Gold Extends Gains as Trump Tariffs Fuel Safe Haven Flows

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
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Gold Extends Gains as Trump Tariffs Fuel Safe Haven Flows

Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo
Gold bars from the vault of a bank are seen in this illustration picture taken in Zurich November 20, 2014. REUTERS/Arnd Wiegmann/File Photo

Gold prices rose for a second straight session on Tuesday, but traded below the recent all-time highs, as uncertainty around US President Donald Trump's tariff plans continued to fuel economic growth concerns and safe haven flows into bullion.

Spot gold gained 0.6% at $2,913.79 an ounce as of 0714 GMT. It hit a record high of $2,942.70 last week.

US gold futures added 0.9% to $2,925.50.

"Trump's disruptive modus operandi, aggressive rhetoric and tariffs - whether actual or threatened - could unravel global trade and intricate supply chains," said Nikos Tzabouras, senior financial writer at trading platform Tradu, Reuters reported.

"With uncertainty surrounding the global economy and the broader geopolitical landscape in the Trump 2.0 era, gold is set to remain a natural beneficiary of risk-off flows and central bank buying."

Since taking office last month, Trump has swiftly redrawn the global trade battlefield with a series of tariffs, while plans are already in motion for sweeping reciprocal tariffs, aimed squarely at any nation that taxes US products.

"Gold continues to benefit from the uncertainty surrounding the US. government's tariff policy. Central bank buying should also continue to provide support, even if there is no new data on this," Commerzbank analysts said in a note.

The market's focus has now shifted to the US Federal Reserve's January meeting minutes due on Wednesday for clues into the central bank's interest rate trajectory.

"Price gains are also supported by growing expectations that the Fed will cut rates in 2025 - a sentiment that gained further traction among traders after last week's disappointing US retail sales figures," Ricardo Evangelista, senior analyst at brokerage firm ActivTrades, said.

Bullion benefits from geopolitical and economic uncertainties, as well as rising price pressures, but higher interest rates diminish the asset's allure.

Spot silver fell 0.9% to $32.50 an ounce. Platinum jumped 0.9% to $985.20 and palladium climbed 1.6% to $978.00.