Economy Update: Gold Prices Surge Amid Declining Dollar
Gold prices witnessed an uptick on Monday, buoyed by a weakening US dollar. Investors remain vigilant for more insights into President Donald Trump’s impending customs duties, which threaten to escalate global tensions.
In spot trading, gold rose 0.5% to $2,896.41 an ounce, having pulled back from an intraday peak of $2,906.38 an ounce. Notably, the metal reached a record high of $2,942.70 an ounce on February 11.
In the futures market, US gold contracts climbed by 0.3%, trading at $2,909.20 an ounce.
Declining Dollar Index
Simultaneously, the dollar index remains near its lowest point in two months. This decline follows the release of US economic data that fell short of expectations, rendering gold more accessible for holders of foreign currencies.
Calvin Wong, Chief Market Analyst for the Asia Pacific region at Oanda, emphasized that the dollar’s weakness, combined with uncertainty regarding Trump’s dealings with major trading partners on customs policies, enhances the attractiveness of gold as a safe investment.
Continuing his stance, Trump indicated on Friday that tariffs on automobiles would take effect on April 2, further heightening market anxieties.
In the coming days, the Trump administration is set to initiate peace talks involving Russian and Ukrainian negotiators in Saudi Arabia.
Tim Water, Chief Market Analyst at KST, noted that if the discussions yield progress towards a peace agreement, the demand for safe-haven assets like gold may diminish. He remarked, “Gold may see reduced momentum if investor demand shifts.” However, he cautioned that ongoing discussions about tariffs and rising inflation concerns could still propel gold prices higher, even if safe-haven inflows decline.
Gold is often viewed as a hedge against inflation and geopolitical instability.
Other Precious Metals Performance
In other precious metals markets, silver gained 0.9% in immediate trading, reaching $32.41 an ounce, marking its highest level since October 31, 2024, when it surged previously.
Platinum prices climbed by 0.8% to $986.85 per ounce, while palladium experienced a 2% rise, trading at $980.70 per ounce.
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