Early Asian trading on Monday saw a decline in gold prices as investors anticipated Donald Trump’s inauguration and clarification on the objectives of the incoming administration, while lessening Middle East tensions restrained demand for safe haven assets.
Spot gold had dropped 0.4% to $2,690.81 an ounce. At $2,734.90, U.S. gold futures fell 0.5%
On Sunday, the first day of a truce that halted a 15-month-old conflict that has wreaked havoc on the Gaza Strip and stoked tensions in the Middle East, Israel freed 90 Palestinian captives and Hamas freed three Israeli hostages.
Trump’s inauguration later in the day was eagerly anticipated by market investors, and his extensive trade tariffs are predicted to intensify inflation and start trade wars, which might make metal a more alluring safe haven investment.
Although gold is employed as a hedge against inflation, its appeal is diminished by rising interest rates.
How vigorously the new administration implements Trump’s policy promises will determine the future course of interest rates in the United States.
A narrow majority of economists surveyed by Reuters predict that the U.S. Federal Reserve will likely maintain interest rates constant on January 29 and start cutting again in March.
In the last six weeks, gold inventories in warehouses permitted by COMEX have increased by a third as market participants sought supplies to protect themselves from potential Trump import duties.
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