Gold prices hit a two-month high on Tuesday as USD weakened, while uncertainty over U.S. President Donald Trump’s trade policies drove safe-haven buying.
Spot gold gained 1.0% to $2,735.19 per ounce, marking its highest level since November 6 and approaching its October record of $2,790.15. The dollar index (DXY) fell 0.98% to 108.27, lingering near a two-week low, making gold more affordable for foreign investors.
Meanwhile, U.S. gold futures dipped slightly by 0.1% to $2,744.80, narrowing the gap with spot prices as Trump did not impose new tariffs immediately after his inauguration on Monday, defying expectations, but he hinted at possible tariffs on Canada and Mexico soon.
Some market participants suggest that uncertainty around Trump’s policies could drive gold to $3,000 per ounce by mid-year.
Gold’s safe-haven status makes it a favoured asset during times of instability. However, Trump’s potentially inflationary policies might lead the Federal Reserve to maintain higher interest rates, which could dampen demand for non-yielding gold.