Gold prices rebounded sharply from a three-week low on renewed demand for safe-haven assets after former U.S. President Donald Trump raised the specter of new tariffs, igniting fresh concerns over global trade tensions. The threat of a potential escalation in the U.S.-China trade war once again pushed investors toward gold, which is traditionally seen as a secure store of value during times of economic uncertainty.
Market Reaction and Price Movement
On Monday, spot gold rose by 0.5% to trade around $2,996.6 per ounce, reversing earlier losses. Meanwhile, gold futures for June delivery climbed by 1.3%, reaching approximately $3,010.70 per ounce. The bounce in prices followed a notable sell-off last week, which saw gold dip to its lowest levels since mid-March, amid a stronger dollar and hawkish comments from the U.S. Federal Reserve.
However, Trump’s comments on potentially imposing new tariffs on Chinese goods, citing unfair trade practices, revived fears of a prolonged trade dispute between the world’s two largest economies. This development injected a new wave of caution into global markets, prompting investors to reassess their risk exposure.
Global Tensions Fueling Demand
Investors are increasingly turning to gold as a hedge against rising geopolitical tensions and potential economic downturns. In addition to the U.S.-China concerns, the European Union is reportedly preparing to implement retaliatory tariffs, further complicating the global trade landscape. The resulting uncertainty has heightened the appeal of gold, particularly as volatility in equity markets grows.
“The latest tariff rhetoric has reminded markets that geopolitical risks are never too far from the surface,” said a senior commodities strategist. “With inflation still lingering and monetary policy decisions on a knife’s edge, gold remains an attractive option for diversification.”
Focus on Fed Policy and Inflation Data
The outlook for interest rates also continues to influence gold prices. This week, traders will closely monitor the release of the Federal Reserve’s meeting minutes and upcoming inflation figures. Market participants are looking for clues regarding the timing and extent of potential rate cuts later this year.
Currently, market expectations suggest the Fed could reduce rates by up to 93 basis points before year-end. Lower interest rates tend to boost gold’s appeal by reducing the opportunity cost of holding non-yielding assets.
Mixed Performance in Other Precious Metals
Elsewhere in the precious metals market, price movements were mixed. Silver slipped slightly by 0.1% to $27.94 per ounce, while platinum gained 0.5% to $952.65. Palladium, often used in automotive catalytic converters, edged down 0.2% to trade at $1,054.75.
Conclusion
In summary, gold prices have staged a notable recovery from recent lows as renewed trade war threats and ongoing geopolitical uncertainties drive investors back toward safe-haven assets. With the global economic outlook still clouded by inflation, policy shifts, and potential trade disruptions, gold is likely to remain in focus for risk-conscious investors in the weeks ahead.
