The dollar’s pullback on Tuesday provided much of the lift for gold. Uncertainty surrounding newly elected President Donald Trump’s tariff policies contributed to the dollar’s weakening, with it hovering around a one-week low against major currencies. Reports suggesting that Trump’s tariffs may be less aggressive than previously signaled sparked speculation among investors, further weighing on the dollar.
However, Trump denied these reports, further increasing uncertainty about the prospects for US trade policy. This ambiguity has kept traders cautious and strengthened gold’s appeal as a hedge against potential economic disruptions.
Chinese gold reserves boost market sentiment
China’s central bank continued its gold purchases for the second month in a row, with reserves reaching 73.29 million fine troy ounces at the end of December. This continued accumulation underlines strong demand from one of the world’s largest gold consumers. Analysts view this as a supportive factor for gold prices, reinforcing expectations that central bank demand will remain a mainstay of strength for the market.
“By re-entering the market in December, Beijing signaled that its gold purchasing program remains active – a development that is likely to provide continued support to the precious metal’s price,” said Ricardo Evangelista, senior analyst at ActivTrades.
Traders are waiting for important economic data from the US
Markets are also monitoring a range of US economic indicators this week. Data on job openings (JOLTs) and PMI for services from ISM will be released on Tuesday, while ADP employment figures will follow on Wednesday. The week will end with Friday’s nonfarm payrolls report, which could have a significant impact on the Federal Reserve’s policy outlook.