Gold extends gains to an 11-week high early Wednesday on a softer dollar and safe haven demand, making the yellow metal a more attractive asset for investors.
The haven demand was driven by investors uncertain about the economic impact of new U.S. President Donald Trump’s tariffs and trade policy. The day after he began his term, Trump said he intends to impose a 10% tariff on Chinese imports to the U.S. as of Feb. 1. He said the day before he would impose a 25% tariff on imports from Canada and Mexico.
The yellow metal is considered a safe asset during times of economic or political uncertainty.
Front-month gold futures rose 0.4% Tuesday to $2,759.20 an ounce on Comex. Most U.S. financial markets were closed Monday for the Martin Luther King Jr. Day holiday. The most-active February contract gained 1.2% last week. Bullion dropped 1.5% in December after losing 2.5% in November and rising 3.4% in October. The metal gained 27% in 2024, its biggest annual gain since 2010. Gold’s 2024 rally was spurred by the Fed, the economy and global central bank buying cycles. The February contract is currently up $4.30 (+0.16%) an ounce to $2763.50 and the DG spot price is $2759.80.
The economic outlook from the trade policy and Trump’s stated plans for mass deportations from the U.S. may affect the Federal Reserve’s planned interest rate cuts for this year. Rate cuts are considered bullish for gold, making the yellow metal a more attractive asset for investors.
Most investors aren’t pricing in a rate cut until June, according to investors tracked by the CME FedWatch Tool. Fed policymakers are almost unanimously expected to keep interest rates unchanged next week, with just 0.5% betting on another 25 basis point cut.
The Fed reduced its benchmark interest in September, November and December. It’s now at 4.25% to 4.50%. Previously, the central bank had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to combat inflation.
In economic news, the U.S. Conference Board’s index of leading economic indicators comes out Wednesday, followed by weekly initial jobless claims Thursday and University of Michigan consumer sentiment on Friday.
The World Economic Forum in Davos, Switzerland, is also underway this week and will showcase comments from a number of government, economic and business leaders from around the world.
Front-month silver futures increased 1.2% Tuesday to $31.50 an ounce on Comex. The most-active March contract lost 0.6% last week. Silver dropped 6% in December after falling 5.1% in November and advancing 4.3% in October. It gained 21% in 2024. The March contract is currently down $0.291 (-0.92%) an ounce to $31.205 and the DG spot price is $30.82.
Spot palladium gained 2.1% Tuesday to $980.50 an ounce. It edged up 0.2% last week. Palladium fell 6.7% in December after sliding 12% in November and increasing 11% in October. Palladium dropped 17% last year. Currently, the DG spot price is up $16.50 an ounce to $992.50.
Spot platinum rose 0.4% Tuesday to $953.70 an ounce. It slid 1.9% last week. Platinum lost 4.6% last month after declining 4.2% in November and rising 1.5% in October. Platinum slid 8.4% in 2024. The DG spot price is currently down $1.90 an ounce to $956.90.
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