- Gold price strengthens to approximately $2,985 during the early Asian session on Monday.
- Gold prices are supported by economic uncertainty, Trump’s trade tariffs, and geopolitical tensions.
- The US envoy stated that Trump is likely to have a conversation with Putin this week.
Gold Remains Strong After Pullback from Record High
Gold price (XAU/USD) stays resilient near $2,985 after briefly reaching an all-time high of $3,005 during the early Asian session on Monday. The metal continues to find support from a weaker US Dollar (USD) and growing concerns over a global trade war. Investors are also awaiting the release of US February Retail Sales data later in the day.
Trade War Fears Fuel Market Uncertainty
Escalating trade tensions between the US and its major partners have unsettled financial markets. On Thursday, US President Donald Trump announced a potential 200% tariff on wine, cognac, and other alcoholic beverages imported from Europe. This decision follows the European Union’s plan to impose tariffs on American whiskey and other US products in April. The EU’s move is a response to Trump’s 25% tariff on steel and aluminum imports, which took effect on Wednesday.
Weak US Dollar Adds to Gold’s Appeal
A softer US Dollar has further boosted gold prices. Recent US economic data came in below expectations, adding to concerns about economic stability. The preliminary University of Michigan (UoM) Consumer Sentiment Index declined to 57.9, its lowest level since November 2022, compared to the previous reading of 64.7. The figure also missed the market forecast of 63.1, reflecting weakening consumer confidence.
Geopolitical Tensions Support Gold Demand
Geopolitical uncertainty continues to drive demand for safe-haven assets like gold. The Houthis claimed on Sunday that they had launched an attack on the USS Harry S. Truman and its support vessels in the northern Red Sea, deploying 18 ballistic and cruise missiles alongside drones. Commenting on the situation, Suki Cooper, a precious metals analyst at Standard Chartered, stated, “In a backdrop of geopolitical uncertainty and ongoing tariff changes, appetite for gold remains strong.”
Potential Peace Talks Could Weigh on Gold Prices
Despite gold’s strength, any positive developments in the Russia-Ukraine conflict could limit further gains. Last week, the US and Ukraine proposed a 30-day ceasefire to Russia. Trump’s envoy, Steve Witkoff, indicated on Sunday that Trump is expected to hold talks with Russian President Vladimir Putin this week, noting that Putin “accepts the philosophy” of Trump’s ceasefire and peace terms. If diplomatic progress is made, gold prices may face downward pressure.
