At 12:04 GMT, XAU/USD is trading $2723.29, up $15.39 or +0.57%.
Weaker dollar strengthens gold’s strength
The US dollar index fell 0.6% on Tuesday, trading near a two-week low. A weaker dollar made gold more attractive to foreign investors, while gold bullion became cheaper for holders of other currencies.
Later in the day, the dollar regained some ground as President Donald Trump raised the possibility of a 25% tariff on imports from Mexico and Canada. While this led to a temporary recovery of the dollar, gold’s safe-haven appeal remained intact, supported by continued concerns about trade policy uncertainty.
Demand for safe havens is driving gold higher
Gold’s role as a hedge against economic and geopolitical uncertainty has been a driving factor in recent performance. Trump’s comments over possible tariffs on Canada, Mexico and China raised fears of disruptions to global trade, causing investors to shift their capital to safe havens such as gold.
In addition, U.S. Treasury yields fell on Tuesday as markets absorbed the economic implications of Trump’s policy announcements. Investors showed risk-off sentiment after the signing of more than 40 executive orders, adding to the uncertainty surrounding his administration’s economic agenda.
Market forecast for gold prices
Gold’s upside momentum and breakout above $2,726.30 indicate a bullish near-term outlook. If prices continue to rise, the market could test the all-time high of $2,790.17. However, resistance could emerge if the U.S. dollar continues to appreciate or if markets anticipate prolonged high interest rates from the Federal Reserve.