Gold eases as firm dollar dents safe-haven demand amid trade war concerns

Gold eased on Monday as a slight bounce in US dollar dented safe-haven demand amid trade war concerns, while investors awaited inflation data this week for clues on the Federal Reserve's next interest rate decision.

Spot gold fell 0.2 per cent to $2,905.05 an ounce at 1201 GMT, while US gold futures were steady at $2,911.60.

The dollar index slightly pared losses after hitting its lowest in over 4-months on Friday. Quantitative Commodity Research analyst Peter Fertig said a rise in the dollar was weighing on bullion and he expects a further correction to below $2,900. [USD/]

Meanwhile, market focus remains on trade tensions. In his latest warning to Canada, US President Donald Trump said on Friday that reciprocal tariffs on dairy and lumber could be imminent.

"Gold prices are likely to remain supported around the $2,900 level, with the possibility of revisiting the all-time maximum of $2,956 reached in late February," said Ricardo Evangelista, senior analyst at brokerage firm ActivTrades.

Traders are awaiting US Consumer Price Index (CPI) data on Wednesday and the Producer Price Index (PPI) on Thursday for US interest rate cues.

The Fed has held interest rates steady after cutting three times in 2024. Market pricing reflects expectations of the first cut this year in June.

Bullion is seen as a hedge against inflation and geopolitical uncertainty but higher rates can dent the non-yielding asset's appeal.

Data showed top metals consumer China's consumer price index missed expectations in February and fell at the sharpest pace in 13 months, while producer price deflation persisted.

Spot silver was unchanged at $32.55 an ounce, platinum rose 0.6 per cent to $968.40 and palladium was up 0.2 per cent at $950.50.