Gold prices firmed on Monday as USD weakened, with global markets focused on Donald Trump's upcoming inauguration speech for insights on inflation and Federal Reserve rate decisions.
Spot gold climbed 0.2% to $2,706.81 per ounce by 09:46 GMT, recovering from an earlier dip of 0.5%.
The U.S. dollar index (DXY) began the week on a weaker note, with Trump set to assume the presidency at noon ET (17:00 GMT). A declining U.S. currency typically enhances gold's attractiveness to international investors.
Some market experts believe that a more conciliatory or softer tone from Donald Trump on trade and tariff policies could potentially ease inflationary concerns. This, in turn, might lead to a decrease in the U.S. dollar and Treasury yields, with gold being one of the assets that could benefit from such a scenario.
Gold, a traditional hedge against inflation, may gain from Trump’s anticipated tariff-driven policies, which could stoke inflationary pressures. Nonetheless, higher interest rates continue to temper its appeal.
In a research note, Goldman Sachs assigned a low (only 10%) probability to the introduction of a 10% effective tariff on gold within the next 12 months while reiterating its mid-2026 price target of $3,000 per ounce. The bank expects central bank gold demand to remain robust, though it forecasts fewer interest rate cuts in 2025.
A Reuters survey of economists suggested the Federal Reserve will likely maintain its current interest rate at its January 29 meeting, with potential cuts resuming in March.