Safe-haven gold gains amid weak US dollar, Trump's tariff policies

Gold prices firmed on Monday after hitting a more than three-week low in the previous session, supported by a weaker dollar and safe-haven buying triggered by concern over US President Donald Trump's tariff policies.

Spot gold gained 0.3 per cent to $2,868.54 an ounce by 0939 GMT. US gold futures rose 1 per cent to $2,878.9. 

The dollar index dropped by 0.4 per cent from a more than two-week high in the previous session, reflecting weakness that makes dollar-priced gold less expensive for buyers holding other currencies.

 

"Gold's downside remains limited, given the apparent demand for safe havens amid rising geopolitical and economic growth uncertainties," said Han Tan, Exinity Group's chief market analyst.

Trump last week threatened China with an extra 10 per cent duty, set to take effect on Tuesday, resulting in a cumulative 20 per cent tariff.

Despite being widely viewed as a hedge against geopolitical uncertainty, non-yielding gold becomes less attractive to investors when interest rates rise.

Gold fell more than 1 per cent in the previous session, retreating from record highs breached on multiple occasions this year, after US inflation data suggested that the Federal Reserve could adopt a cautious stance on cutting interest rates this year. [GOL/]

Traders now await the US payrolls report due later this week for more clues on the Fed's monetary policy.

"Our forecast for gold to reach $3,000/oz this year is unchanged," UBS analysts wrote, adding that it could reach as high as $3,200 in certain risk scenarios.

"We see room for larger gains in silver as the gold rally consolidates and global industrial production signals a modest recovery."

Spot silver was up 0.6 per cent at $31.35 an ounce, platinum gained 0.3 per cent to $950.2 and palladium added 1.2 per cent to $929.79.