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Gold prices declined in Asian trading on Monday, weighed down by a resurgent dollar following U.S. President-elect Donald Trump’s announcement of steep potential tariffs targeting the BRICS nations. While geopolitical tensions provided some haven demand, they were not sufficient to counteract the bearish pressures from currency markets.
Gold Under Pressure from Dollar Strength
Spot gold dropped 0.9% to $2,629.74 per ounce, with February futures slipping 1.1% to $2,652.11 per ounce. Trump’s threat of imposing “100% tariffs” on BRICS countries added significant momentum to the dollar, pressuring commodities priced in the currency.
The move signals a continuation of protectionist trade policies and sparked fears of escalating global trade tensions. The dollar’s rise not only hurt gold but also reverberated across the precious metals market, with platinum down 0.7% to $945.90 and silver falling 1.5% to $30.648 per ounce.
Geopolitical Tensions Mixed for Haven Demand
Despite the retreat in gold prices, geopolitical risks provided some cushion. While the Israel-Hezbollah ceasefire held, mitigating immediate Middle East concerns, escalating tensions between Russia and Ukraine kept haven buying alive. Russia’s recent aggressive strikes on Ukraine’s energy infrastructure and threats of advanced missile deployments sustain an uncertain backdrop.
Copper Slides Despite Positive Chinese Data
Copper prices also experienced downward pressure, with London Metal Exchange benchmark futures falling 0.5% to $8,976.50 per ton. March copper futures slipped 0.7% to $4.1145 per pound.
This decline came despite upbeat manufacturing data from China, the world’s largest copper importer. Both government and private PMIs for November exceeded expectations, reflecting the positive impact of recent stimulus measures by Beijing. However, traders remain cautious, anticipating potential disruptions from a renewed U.S.-China trade conflict.
Outlook for Precious and Industrial Metals
- Gold: The metal’s trajectory will be closely tied to the dollar’s movement and evolving U.S. trade policies under Trump. While geopolitical tensions may intermittently support prices, a robust dollar and elevated interest rate expectations could limit significant upward momentum.
- Copper and Industrial Metals: China’s stimulus efforts may offer short-term support, but prolonged trade uncertainties and dollar strength could weigh on demand and pricing.
Trump’s tariff threats, coupled with dollar strength, are reshaping the metals market landscape. Gold and industrial metals face headwinds, even as geopolitical and economic developments provide some counterbalance. Traders are advised to monitor upcoming political developments, including U.S. policy signals and China’s additional stimulus measures, for clearer market direction.
