Gold prices saw a decline on Monday, pressured by a stronger U.S. dollar following President-elect Donald Trump’s threat to impose heavy tariffs on BRICS nations. The announcement, aimed at discouraging these countries from exploring alternatives to the dollar, led to a rise in the value of the greenback, weighing on gold and other precious metals.
Dollar Strengthens as Trump Targets BRICS
Trump’s warning of imposing “100% tariffs” on the BRICS bloc (Brazil, Russia, India, China, and South Africa) created immediate market turbulence. Traders reacted by pushing the dollar higher, while the currencies of the BRICS countries weakened. The potential for more protectionist measures under Trump added to concerns, particularly following his recent threats to introduce additional tariffs on China, Canada, and Mexico.
The strengthened dollar put downward pressure on gold, traditionally viewed as a safe-haven asset. The market’s uncertainty over inflationary pressures and the prospect of elevated U.S. interest rates under Trump’s administration further rattled metal markets.
As of 1:23 p.m. ET (1823 GMT), spot gold was down 0.7%, trading at $2,636.06 per ounce, while February gold futures dropped 0.8%, settling at $2,658.84 per ounce.
Safe-Haven Demand Weakened by Ceasefire in Israel-Hezbollah Conflict
The demand for gold as a safe-haven asset was also dampened by reports indicating that the ceasefire between Israel and Hezbollah appeared to be holding. However, ongoing tensions between Russia and Ukraine continued to support some degree of haven buying in the market.
Other Precious Metals Decline
The impact of a stronger dollar was felt across other precious metals as well. Platinum futures fell 0.5%, reaching $950 per ounce, while silver futures declined 0.7%, trading at $30.883 per ounce.
Copper Prices Dip Amid Tariff Concerns and Strong Dollar
Industrial metals also saw declines, with copper prices taking a hit as fears of additional U.S. tariffs and a firmer dollar overshadowed positive economic signals from China. Copper futures on the London Metal Exchange dropped 0.2%, to $9,000.50 per ton, while March copper futures slid 0.2%, to $4.1318 per pound.
China, the world’s largest copper importer, reported a stronger-than-expected rise in manufacturing activity for November, according to both government and private purchasing managers’ index data. Despite the positive data, concerns over a potential trade war with the U.S. weighed on market sentiment.
Investors are also awaiting further stimulus measures from China, as the country’s government has implemented aggressive policies since late September to bolster its economic growth. Two key political meetings in December are expected to provide further insight into these efforts.
Conclusion
The threat of U.S. tariffs, coupled with a strengthening dollar, dampened sentiment in the commodity markets on Monday. While there was some optimism from China’s economic data, concerns about a potential global trade war and its impact on industrial demand kept pressure on metal prices.
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