Gold gains on softer dollar as investors weigh Trump tariff impact

NEW YORK: Gold prices rose on Tuesday, helped by a softer US dollar and inflationary risks posed by President-elect Donald Trump’s potential tariff policies, which could influence the pace of Federal Reserve monetary policy easing this year.

Spot gold was up 0.3% to $2,668.79 per ounce as of 1200 GMT. US gold futures gained 0.1% to $2,682.30. “Gold prices are benefiting from reports that the incoming Trump administration is considering a gradual implementation of tariff increases to mitigate their impact on inflation,” said Ricardo Evangelista, senior analyst at ActivTrades, referring to a Bloomberg report.

“This news led to a slight decline in US Treasury yields and a weakening of the dollar.” The dollar index fell 0.3% from a more than two-year high hit in the last session as traders scaled back US rate cut bets for 2025 after a strong jobs report. A softer dollar makes gold more affordable for buyers using other currencies. Investors are looking out for US Producer Price Index (PPI) data at 1330 GMT and Consumer Price Index (CPI) numbers due on Wednesday. A Reuters poll of economists gives a median forecast for an annual rise in CPI of 2.9%, up from November’s 2.7%.

Also due US retail sales on Thursday for further insights into the economy and the Fed’s 2025 policy trajectory. “If inflation increases again based on Trump´s spending policy, we may even see no cuts at all in the mid-term,” said Henrik Marx, head of precious metals trading at Heraeus Precious Metals Germany. Bullion is used as a hedge against inflation, although higher interest rates reduce the non-yielding asset’s appeal. Elsewhere, spot platinum was down 0.4% to $949.80.

“We look for platinum to be under-supplied by 500,000 ounces, or 6.4% of demand, in 2025,” UBS said in a note. Spot silver firmed 0.5% to $29.75 per ounce and palladium climbed 0.5% to $943.70.