Gold prices erased early losses on Monday to remain close to record highs on safe-haven demand driven by growth and inflation concerns sparked by U.S. President Donald Trump’s tariffs on Mexico, Canada and China.
Having initially slid more than 1% on a surging U.S. dollar, spot gold recovered to be down 0.1% at $2,799.09 an ounce by 1146 GMT while U.S. gold futures lost 0.1% to $2,832, still trading at a premium to spot rates.
The 25% tariffs imposed by Trump on Canadian and Mexican imports from Tuesday, along with a 10% charge on Chinese goods, fuelled fears of a trade war that could slow global growth and feed inflation.
Canada and Mexico ordered retaliatory measures while China said it would challenge the tariffs at the World Trade Organization and take unspecified countermeasures.
Gold, often regarded as a safe-haven investment during periods of economic or geopolitical instability, soared to a record peak of $2,817.23 on Friday.
But prices retreated early on Monday as the dollar surged to its strongest in three weeks, making gold more expensive for buyers holding other currencies. [USD/]
“The stronger U.S. dollar was temporarily weighing on the yellow metal, but the case to hold gold as a safe haven still makes sense to me in a world going potentially into a tariffs war,” said UBS analyst Giovanni Staunovo.
“I still see upside for gold from current levels, looking for prices to head to $2,850/oz over the coming months.”
J.P. Morgan noted that bearish contagion from equities could weigh on gold in the near term, but disruptive tariffs continue to fuel a medium-term bull case for bullion.
Data this week on U.S. job openings, the ADP employment report and the U.S. employment report could provide insights into the health of the U.S. economy.
Spot silver edged down by 0.1% to $31.27 an ounce, platinum lost 1% to $967.9 and palladium gained 1.2% to $1,020.31.
