Gold pared early losses on Monday as investors looked forward to Donald Trump’s inauguration speech for clarity on the incoming administration’s policies, which could offer new clues about the trajectory of interest rates of the Federal Reserve.
Spot gold was down 0.1% at $2,697.60 an ounce, by 0300 GMT, after falling 0.5% earlier in the day. U.S. gold futures fell 0.3% to $2,740.10.
“Gold came under selling pressure today, but the precious metal’s status as a traditional safe haven should limit the immediate decline,” said Tim Waterer, chief market analyst at KCM Trade. [GOL/]
“If we happen to hear a more conciliatory or gentler tone from President Trump regarding trade and tariff policies, that could ease inflationary concerns, which could see the U.S. dollar and Treasury yields decline, and Gold is potentially an asset that could benefit from this scenario.”
Market participants were eagerly awaiting Mr. Trump’s inauguration later today, and his far-reaching tariff policies are expected to further inflame inflation and trigger trade wars, which could increase the appeal of gold as a safe haven.
Gold is used as a hedge against inflation, but rising interest rates are reducing its appeal. It also serves as a safe haven.
-The future path of US interest rates will depend on how aggressively the incoming administration implements Mr Trump’s policy promises.
The Federal Reserve will likely maintain interest rates on Jan. 29 and start cutting them again in March, according to a narrow majority of economists polled by Reuters.
Elsewhere, Hamas freed three Israeli hostages and Israel released 90 Palestinian prisoners on Sunday, the first day of a ceasefire suspending a 15-month-old war that has devastated the Gaza Strip and inflamed the Middle East.
Silver fell 0.6% to $30.16 an ounce, palladium held steady at $947.99 and platinum lost 0.2% to $940.84.
