Gold Prices Edge Higher Amid Safe-Haven Demand, Dollar Strength Limits Gains
Gold prices inched higher during Asian trade on Wednesday, building on modest gains from the previous session as safe-haven demand remained supported by the potential for increased U.S. trade tariffs.
However, stronger gains were capped by the robust performance of the U.S. dollar, while easing tensions in the Middle East also dampened safe-haven buying.
Spot gold rose 0.3% to $2,040.16 an ounce, while February gold futures climbed 0.7% to $2,065.41 an ounce as of 23:38 ET (04:38 GMT).
Trump Warns of New Trade Tariffs
U.S. President-elect Donald Trump renewed concerns over a global trade war after threatening to impose additional tariffs on China, Canada, and Mexico upon taking office.
Analysts cautioned that significant tariff hikes could hinder global economic growth and elevate U.S. inflation, potentially leading to higher long-term interest rates.
The dollar surged on this outlook, curbing further advances in gold prices.
Safe-haven demand for gold also softened following U.S. President Joe Biden’s announcement of a ceasefire agreement between Israel and Hezbollah, signaling a de-escalation of tensions in the Middle East.
Other Metals See Modest Gains
Among other precious metals, silver futures increased 0.4% to $30.962 an ounce, while platinum futures edged up to $932.05 an ounce.
Industrial metals also saw slight gains, with benchmark copper futures on the London Metal Exchange rising 0.6% to $9,026.50 per ton, and February copper futures up 0.4% to $4.1463 per pound. Bank of America: Trump Policies Could Dampen Gold Demand
Bank of America analysts cautioned in a recent note that U.S. economic policies under Donald Trump’s administration could curb investor interest in gold. The policies, aimed at boosting U.S. growth and strengthening the dollar, are likely to weigh on the precious metal’s appeal.
Trump is anticipated to implement further corporate tax cuts and other expansionary measures in his second term, which, while bolstering economic growth, are expected to drive inflation higher.
This scenario could result in relatively elevated U.S. interest rates over the long term, strengthening the dollar and Treasury yields but diminishing demand for gold.
Gold and other precious metals faced significant declines throughout November, following Trump’s election win earlier in the month.
Industrial metals also came under pressure due to concerns about a more aggressive U.S. stance toward China—a key consumer of copper and other base metals.
