Gold prices (XAU/USD) are seeing modest gains around $2,920 in early Thursday trading, as renewed trade tensions and economic uncertainty continue to drive investors towards safe-haven assets like gold.
On Wednesday evening, US President Donald Trump reiterated his stance on imposing 25% tariffs on goods from Canada and Mexico, with these measures set to take effect on April 2. Trump also announced plans to target the European Union (EU) with similar tariffs, further heightening trade tensions.
These ongoing tariff threats are creating a cloud of uncertainty in the markets, and traders are likely to remain cautious. This uncertainty is expected to bolster demand for gold, traditionally seen as a safe-haven asset during times of economic turmoil.
However, Trump’s tariff policies have also raised concerns about inflationary pressures in the US, which could prompt the Federal Reserve to keep interest rates elevated for an extended period. Higher rates generally reduce the appeal of non-yielding assets like gold, potentially limiting its upside potential.
Despite the current price fluctuations, analysts suggest that the pullback in gold prices may simply be a part of a normal profit-taking phase, with the overall bullish trend for the precious metal still intact. “We continue to see an overall upward trend,” said David Meger, Director of Metals Trading at High Ridge Futures, adding that this appears to be a routine correction rather than a shift in market sentiment.
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