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Gold prices climbed to their highest level in 11 weeks during Asian trading on Wednesday, bolstered by growing safe-haven demand as traders reacted to tariff uncertainties under President Donald Trump’s administration.
Gold’s Performance
- Spot Gold: Rose 0.2% to $2,749.29 per ounce, the highest since early November.
- Gold Futures (February): Also gained 0.2%, reaching $2,766.57 per ounce by 01:45 ET (06:45 GMT).
This marks the third consecutive session of gains for the precious metal, as investors hedge against potential inflation stemming from Trump’s proposed policies.
Safe-Haven Appeal Amid Global Uncertainty
Gold, traditionally viewed as a safe-haven asset, has maintained strong performance amid heightened global uncertainty. Markets are reacting to Trump’s tariff threats, including:
- A potential 10% tariff on Chinese imports starting February 1.
- Proposed tariffs targeting the European Union.
These announcements have created a cautious market environment, with investors shifting toward gold as a hedge against geopolitical and economic volatility.
Tariffs, Inflation, and Gold’s Correlation
Trump’s tariff policies are expected to elevate inflation, which further supports gold prices, as the metal is often seen as a reliable inflation hedge.
The U.S. Dollar Index, which rose 0.2% in Asian trading on Wednesday, typically influences gold prices due to their inverse relationship. While a stronger dollar makes gold more expensive for foreign buyers, recent uncertainty around Trump’s tariff strategies has kept gold in demand.
Earlier this week, the dollar saw a sharp decline of over 1% after Trump failed to provide details on the implementation of tariffs, further contributing to gold’s upward momentum.
Looking Ahead
As Trump’s administration navigates its early days, markets are bracing for potential economic shifts driven by his trade policies. Gold prices are likely to remain sensitive to further developments, particularly any announcements related to tariffs or inflation.
For now, gold’s safe-haven status continues to underpin its rally, with traders watching closely for clarity on Trump’s economic agenda in the weeks ahead.
