Gold Nears October Highs Amid Tariff Threats and Rate Cut Expectations
Gold remains elevated near its highest levels since October as traders navigate President Trump's latest tariff threats against Europe and his pledge to push for further interest rate reductions.
Boosted by safe-haven demand amid global economic uncertainty under the new US administration, bullion trades near $2,754 an ounce and is poised for a weekly gain of approximately 2%.
During a video address at the World Economic Forum in Davos, Trump threatened import levies on Europe in an attempt to repatriate manufacturing to the US. Since taking office on Monday, he has listed China, the EU, Canada, and Mexico as potential targets for import tariffs, sparking concerns over retaliation and further underpinning gold's appeal as a haven.
The president also announced his intention to demand immediate US interest rate cuts. While lower borrowing costs typically support precious metals, traders remain cautious as monetary policy remains solely within the purview of the Federal Reserve, which is scheduled to make a rate decision next week.
Gold's record-breaking rally in 2020 was driven by the Fed's pivot towards rate cuts, geopolitical tensions, and central bank purchases. Traders are now also scrutinizing Trump's domestic agenda, including his promises to lower taxes and overhaul immigration. Such policies could strain the nation's finances and rekindle inflation, potentially complicating the Fed's rate-cutting trajectory.
As of 8:04 am in Singapore, spot gold held steady at $2,755.35 an ounce, while the Bloomberg Dollar Spot Index remained unchanged. Silver and palladium saw minimal price fluctuations, while platinum ticked higher.