Trump’s call for lower interest rates at the World Economic Forum has been added to the dollar’s slide. A weaker greenback improves Gold’s appeal by making it more affordable to foreign buyers, further boosting demand.
Tariff and trade uncertainty provide support
Trump’s rhetoric on trade, including a potentially “friendly” resolution with China, has left traders skeptical about the size of future tariffs. Markets are now anticipating tariff announcements on Canada, Mexico, China and the European Union before February 1, taking attention away from the upcoming Federal Reserve Meeting. Expectations that the Fed will hold rates next week also boosted Gold’s attractiveness in a low yield environment.
Inflation and instability keep gold in demand
Gold’s role as a reliable inflation hedge remains crucial in this uncertain environment. With zero-yield assets such as gold gaining favor during periods of economic instability, traders continue to position for potential central bank accommodation and elevated price levels. A short-covering rally has further strengthened gains, although ETF flows remain mixed as traders weigh short-term catalysts.
Gold Prices Prediction: Testing Record Highs
Gold’s bullish momentum suggests a retest of its all-time high of $2,790.17 could be imminent. Continued weakness in the dollar, coupled with uncertainty around tariffs and trade policy, provides a favorable backdrop for further upside. Traders should monitor rate announcements and shifts in risk sentiment as key drivers of price action in the week ahead.
More information in our economic calendar.