Gold edges high as traders weigh uncertainty around Trump’s policies

Onome Amuge

Gold prices climbed higher in Asian trading on Tuesday, underpinned by a depreciation of the U.S. dollar overnight and investors’ efforts to gauge the policy direction of newly-inaugurated U.S. President Donald Trump.

Gold traders experienced a surge of activity in Asian trading on Tuesday, with Spot Gold prices gaining 0.3 percent to reach $2,727.39 per ounce, and gold futures contracts for February delivery advancing 0.4 percent to settle at $2,743.57 an ounce.

As U.S. President Donald Trump commences his second term in office, market participants anticipate a renewed bout of volatility, with his anticipated policy announcements projected to influence market dynamics.

Gold, considered a safe-haven asset, continued to hold its own above the one-month peak price level, reflecting its resilience despite the shifting dynamics in global markets.

Market sentiment remains in a delicate balance as investors observe the potential policy shifts under the newly re-elected U.S. President Donald Trump, while also keeping a close eye on the monetary policy stance of the Federal Reserve.

As Trump begins his second term, analysts aver that his stated commitment to impose new tariffs on neighboring countries, particularly China, with the aim of reducing America’s trade deficit, is likely to strengthen the U.S. dollar. This could, in turn, pressurise gold prices, as the precious metal typically inversely correlates with the dollar’s value.

The U.S. dollar Index, which serves as a benchmark for the greenback’s performance against six other major currencies, declined by more than one percent in overnight trading, only to regain some of its losses during Asia hours, rising by 0.3 percent.

A weaker dollar typically serves as a tailwind for gold prices, making the precious metal more affordable for purchasers utilising other currencies, such as the Euro or Japanese Yen.

In light of this dynamic, traders are keeping a keen watch on Trump’s policy decisions, seeking to determine their influence on the trajectory of Gold prices.

Tuesday morning saw a mixed bag for precious metals, with platinum futures dipping by 0.4 percent to $958.80 an ounce and silver futures rising by 0.6 percent to settle at $31.30 an ounce.

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