At 11:45 GMT, XAU/USD is trading $2940.40, down $11.66 or -0.39%.
Safe-Haven Flows Dominate on Trade War Jitters
Gold’s allure as a safe haven is being bolstered by escalating trade tensions as U.S. President Donald Trump presses ahead with tariffs on Canadian and Mexican imports. Despite border security enhancements by these countries, Trump confirmed on Monday that tariffs remain “on time and on schedule” ahead of the March 4 deadline.
UBS analyst Giovanni Staunovo noted that this uncertainty is driving a “range trading environment” in precious metals. As Mexico and Canada are significant gold and silver producers, the tariffs could widen the price spread between U.S. and London markets.
Gold’s recent surge past the previous all-time high of $2,790.17 highlights the strong safe-haven demand against the backdrop of global economic and political risks.
Fed Policy in Focus as Inflation Data Looms
Traders are also eyeing the U.S. Federal Reserve’s stance on interest rates. Research from the San Francisco Fed suggests the central bank may respond “strongly and systematically” to inflation and labor market shifts. Higher inflation could lead to sustained high rates, which might weigh on non-yielding assets like gold.
Friday’s U.S. Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation gauge, is expected to offer insights into the central bank’s monetary policy outlook.
