The US dollar, which suffered its worst week since November 2023, rose 0.25% on Monday as investors reacted to renewed trade concerns. President Donald Trump’s recent decision to impose 25% tariffs on Colombian imports, following the country’s initial refusal to accept deported migrants, has created uncertainty.
Market participants fear further tariff increases, possibly up to 50%, if compliance issues persist.
A stronger dollar tends to put pressure on gold and silver prices, making them more expensive for holders of other currencies. “The current movement suggests downside risks for gold remain contained, but the dollar’s resilience poses significant headwinds,” said an analyst at IG Markets.
Fed rate cuts and bond yields in pictures
Despite the dollar’s downward pressure, gold remains supported by expectations of Federal Reserve rate cuts in 2025. Lower interest rates generally increase the appeal of non-yielding assets like gold.
U.S. Treasury yields have fallen in response to speculation about two possible rate cuts this year, with traders keeping a close eye on emerging economic indicators such as the Sustainable Goods Orders and the Consumer Confidence Index.
However, market sentiment remains mixed. Analysts at JPMorgan note that “the outlook for gold remains uncertain as trade policy counters optimism about possible Fed easing.”