Gold Hits 11-Week High Amid Trump Policy Uncertainty

22 Jan 2025 , 10:23 AM

A lower dollar and increased demand for safe haven assets due to uncertainty around U.S. President Donald Trump’s trade policy helped gold prices rise to a new 11-week high on Wednesday.

Spot gold was up 0.1% at $2,748.58 an ounce, having earlier in the day reached its highest level since Nov. 5. At $2,763.40, U.S. gold futures increased 0.1%.

The dollar fell Monday as Trump refrained from enacting trade restrictions on his first day in office.

Foreign buyers find gold more appealing when the dollar declines. In times of economic and geopolitical turmoil, gold is regarded as a secure investment.

Trump declared that his government was considering enacting a 10% tax on Chinese imports on February 1 and threatened to impose tariffs on the European Union.

If Trump’s inflationary policies cause the Fed to keep interest rates higher for longer, gold’s allure as an inflation hedge might be lessened.

The Fed will meet next week with one eye on new Trump administration plans and another on a bond market that has increased borrowing costs even as U.S. central bankers have been lowering interest rates, following two years of success on inflation and surprisingly sustained economic growth.

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