Gold holds gain as reduced threat of US trade war hurts dollar
Gold held an advance as President Donald Trump held off from imposing sweeping trade tariffs against China and other nations on his first day in office, which hurt the US dollar.
Bullion traded near $2 710 an ounce, after prices edged higher on Monday as the greenback tumbled by the most in 14 months. Fears over a full-blown trade war have eased, with Trump instead ordering his administration to address unfair trade practices globally and investigate whether Beijing had complied with a deal signed during his first term. A weaker dollar tends to boost bullion’s appeal.
As the immediate risk of fresh tariffs faded, the gap between New York and London prices for gold and silver narrowed. The spread had widened in recent weeks as traders prepared for the possibility of sweeping curbs.
Investors were also weighing the outlook for inflation, with Trump’s domestic agenda of tax cuts and increased spending potentially pointing to ongoing price pressures this year. That may limit the Federal Reserve’s ability to keep easing monetary policy. Higher borrowing costs typically pose a headwind for bullion, as it does not pay interest.
Gold set a series of records in 2024, with gains driven by the Fed’s pivot to looser monetary policy, geopolitical tensions, and central-bank buying. The precious metal may yet receive a further boost from demand for haven assets amid concerns about the new president’s immigration policy, as well as scope for increasingly fraught US relations with other nations.
Elsewhere, traders were monitoring the impact of a long-delayed ceasefire deal in the Gaza war as Hamas released three female hostages in exchange for 90 Palestinians held in Israeli prisons.
Spot gold was up 0.1% to $2 710.84 an ounce at 8:23 a.m. in Singapore. The Bloomberg Dollar Spot Index was down 0.2%, after a 1.1% loss on Monday. Silver and platinum edged up, while palladium was little changed.
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