Gold Price Trends After Rebound from $2,708 Amid Trump Tariff Threats
by Rania Gule, Senior Market Analyst at XS.com – MENA
Gold prices have recently experienced strong positive momentum, trading at $2,728 on Tuesday, driven by economic and geopolitical shifts. Investors have turned to gold as a haven amid rising global concerns, especially following U.S. President Donald Trump’s statements regarding new tariffs on Canada and Mexico, as well as his threat to impose tariffs on China if it does not agree to a TikTok deal. In my opinion, these statements have raised market fears of a potential new wave of global trade wars. These developments have increased demand for gold, as such crises often lead investors to seek protection for their assets from economic fluctuations.
In parallel, recent economic data in the U.S. suggests a potential slowdown in inflation, supporting market bets on an interest rate cut by the Federal Reserve. Additionally, the decline in U.S. bond yields to their lowest level in three weeks is a positive factor for gold, as low yields reduce the attractiveness of higher-yielding assets compared to gold, which does not generate returns. Given these circumstances, it seems to me that the Federal Reserve may find itself compelled to adopt a less hawkish stance, thereby allowing gold to maintain its upward trajectory.
From my perspective, the path to gold’s gains hasn’t been without obstacles. The modest rebound in the U.S. dollar value, along with the generally positive tone in equity markets, partially countered gold’s gains. The dollar benefited from expectations that Trump’s protectionist policies could lead to increased inflation, thereby strengthening the Fed’s case for maintaining higher interest rates. This balance between geopolitical concerns and monetary policies reflects the complexity of the current economic landscape and its impact on gold performance.
However, I believe gold will remain in a strong position due to the underlying support provided by low bond yields and investor concerns over the potential economic and political ramifications. Trump’s statements on tariffs not only affected global growth expectations but also raised questions about the U.S. economy’s ability to bear the consequences of these policies. This dynamic has kept gold attractive as a haven, particularly in the absence of any impactful U.S. economic data in the near term.
Geopolitical risks have also been influenced by ongoing tensions in the Middle East and the recent ceasefire agreement. Hopes that Trump may ease restrictions on Russia in exchange for a peace deal in Ukraine have partially contributed to calming markets, but these developments have not been enough to neutralize the risks pushing gold higher. With the Bank of Japan’s meeting approaching and increased anticipation surrounding its monetary policies, gold may experience further short-term volatility.
I see that global economic data indicates ongoing uncertainty about the recovery of the global economy. The release of the preliminary Purchasing Managers’ Index (PMI) data in the coming days may provide further insights into the strength of the global economy, potentially impacting investor appetite for safe-haven assets like gold. Therefore, gold is likely to remain volatile as economic and geopolitical conditions continue to shape its movement.
It is clear to me that gold’s path faces a blend of challenges and support. While geopolitical risks and bets on interest rate cuts provide strong support for the yellow metal, the stability of the dollar and the positive tone in financial markets may limit gains. Over the long term, gold remains an attractive option for investors seeking safety amid global volatility. In the short term, however, the focus will remain on the Federal Reserve and Bank of Japan’s monetary policies, as well as economic data that could serve as a turning point for gold’s performance in the coming period.
Therefore, I see that gold will remain the focal point of global markets, as economic and political factors intersect to determine its direction. However, investors should keep in mind that gold is not immune to market volatility, and investment decisions should be based on careful analysis of the latest The modest recovery of the dollar and the positive tone in markets may pressure gold in the short term, but market fundamentals still indicate a potential upward trend, especially if protectionist policies continue and fears of a deteriorating global economy intensify.
