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Gold prices saw a slight rebound during Asian trade on Tuesday, recovering from overnight losses as markets assessed the potential impact of President-elect Donald Trump’s proposed trade tariffs. The dollar’s strength, near a two-year high, continued to weigh on the yellow metal, while traders awaited key U.S. inflation data due later this week for further insights into interest rate trends.
Spot gold rose 0.2% to $2,669.41 an ounce, while February gold futures also gained 0.2% to $2,684.85 an ounce by 23:17 ET (04:17 GMT).
Trump Tariffs Likely to Be Gradual
Reports suggest Trump’s administration is considering a phased implementation of trade tariffs, with incremental increases of 2% to 5% per month. This strategy is aimed at providing Washington with greater leverage in trade negotiations while mitigating the inflationary impact of sudden tariff hikes.
Concerns over these tariffs have sparked some safe-haven demand for gold, as traders prepare for potential market volatility. However, the prospect of higher inflation resulting from these duties has offset gains, as it could reinforce the Federal Reserve’s preference for maintaining elevated interest rates.
Trump’s earlier promise of imposing steep tariffs, including a 60% duty on Chinese imports, remains a major concern for global markets as his inauguration on January 20 approaches.
Focus on Inflation Data for Rate Insights
Attention now turns to U.S. consumer price index (CPI) data for December, set for release on Wednesday. Sticky inflation and a robust labor market are expected to give the Federal Reserve room to sustain higher interest rates, which could weigh further on non-yielding assets like gold.
The strong dollar, driven by expectations of slower rate cuts, remains a headwind for gold prices. The dollar index hit a two-year high this week, further pressuring precious metals.
Other Precious Metals
- Platinum: Futures rose 0.3% to $972.90 an ounce.
- Silver: Prices steadied at $30.315 an ounce.
Industrial Metals: Copper Extends Gains
Copper prices advanced on Tuesday, buoyed by expectations of robust demand from China, the world’s largest copper importer. Beijing’s potential for additional stimulus measures continues to support sentiment in the industrial metals market.
- Benchmark copper futures on the London Metal Exchange rose 0.5% to $9,139.50 a ton.
- March copper futures climbed 0.6% to $4.3518 a pound.
China’s trade data revealed a 13-month high in copper imports during December, signaling sustained demand despite broader economic challenges. This, coupled with optimism around Beijing’s stimulus measures, has bolstered confidence among copper traders.
Outlook
Gold’s near-term trajectory will likely hinge on upcoming inflation data and further clarity on Trump’s trade policies. While safe-haven demand may lend some support, the strong dollar and elevated interest rate expectations pose significant challenges. Industrial metals like copper, on the other hand, continue to benefit from China’s resilience and prospects of additional economic stimulus.
