Gold prices stabilized after an earlier dip, as a surge in the U.S. dollar followed President-elect Donald Trump’s warning of a 25% import tariff on goods from Canada and Mexico. Trump defended the tariffs as essential for curbing illegal immigration and drug trafficking across U.S. borders, while also proposing an additional 10% tariff on Chinese imports. A stronger dollar typically diminishes gold’s appeal by making it more expensive for buyers holding other currencies.
As of 10:39 a.m. in Singapore, gold was trading around $2,630 per ounce, recovering from a 3.4% drop the previous day, driven by a reduction in demand for safe-haven assets following easing tensions in the Middle East. A cease-fire agreement between Israel and Lebanon’s Hezbollah is expected to be voted on soon, with a likely approval, according to an Israeli official.
Despite recent volatility, gold has risen more than 25% this year, bolstered by central bank purchases and a dovish shift in U.S. Federal Reserve policy, which has fueled expectations of future rate cuts. Analysts remain optimistic about the outlook for gold, with Goldman Sachs and UBS forecasting further gains in 2025.
“We are seeing growing market expectations of a ‘Golden Age’ for the U.S., driven by pro-market and pro-crypto cabinet selections, alongside an extended timeline for addressing U.S. debt and deficit issues,” noted Nicky Shiels, head of metals strategy at MKS PAMP SA in Geneva. “In the short term, gold may settle at $2,500 rather than $3,000.”
Gold prices gained 0.1%, reaching $2,628.69 an ounce, recovering from a 0.8% loss earlier in the session. The Bloomberg Dollar Spot Index climbed 0.4% after a 0.5% drop in the prior session. Meanwhile, silver and platinum experienced minor declines, while palladium saw a slight increase.
Market attention is now shifting to the upcoming U.S. Federal Reserve meeting next month, with investors eagerly awaiting several key reports this week, including the minutes from the Fed’s November meeting, consumer confidence data, and personal consumption expenditure figures — the Fed’s preferred inflation measure.
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