Gold prices saw a slight uptick in Asian trading on Wednesday, continuing the modest gains from the previous session. The rise was driven by demand for safe-haven assets amid concerns over potential U.S. trade tariffs.
However, gold's rally was limited by the strength of the U.S. dollar, while easing tensions in the Middle East also reduced the need for safe-haven assets.
Spot gold increased by 0.3%, reaching $2,040.16 an ounce, while February gold futures saw a 0.7% rise, climbing to $2,665.41 an ounce by 23:38 ET (04:38 GMT).
Trump Threatens More Tariffs on China, Canada, and Mexico
U.S. President-elect Donald Trump has threatened to impose additional trade tariffs on China, Canada, and Mexico when he takes office. This announcement has raised fears of a potential trade war between the world's largest economies.
Experts warned that such tariffs could dampen global economic growth and drive up inflation in the U.S., which could lead to higher interest rates in the future. As a result, the U.S. dollar strengthened, which limited gold’s overall gains.
Middle East Tensions Ease, Reducing Gold Demand
Gold's appeal as a safe-haven asset was further diminished when President Joe Biden announced a ceasefire agreement between Israel and Hezbollah, signaling a de-escalation in the Middle East conflict.
Other precious metals also showed slight gains on Wednesday. Silver futures rose 0.4% to $30.962 per ounce, and platinum futures edged up to $932.05 per ounce.
Industrial Metals See Modest Gains
In the industrial metals market, copper futures saw a 0.6% rise, reaching $9,026.50 per ton on the London Metal Exchange, while copper futures expiring in February climbed 0.4% to $4.1463 per pound.
Outlook for Gold Amid Trump’s Policies
Analysts from Bank of America warned that Trump’s economic policies, which are likely to promote higher U.S. growth and a stronger dollar, could dampen investor interest in gold. In his second term, Trump is expected to implement more corporate tax cuts and expansionary policies that could spur growth but also lead to higher inflation.
This economic outlook is likely to keep U.S. interest rates elevated in the long term, supporting the dollar and Treasury yields while limiting gold's appeal. Precious metals, especially gold, have seen significant losses throughout November following Trump's election victory.
Industrial metal prices are also under pressure due to concerns over tougher U.S. policies toward China, a major consumer of copper and other base metals.
Trump Plans to Impose 10% Tariffs on China, 25% on Mexico and Canada
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