Gold prices (XAU/USD) continued to rise, reaching approximately $2,865 during early trading on Monday in Asia. The precious metal’s upward trajectory is being fueled by growing trade war concerns, which have driven investors to seek safety in gold.
U.S. President Donald Trump announced on Friday that he plans to impose reciprocal tariffs on various countries, with the measures set to take effect by Tuesday or Wednesday. This development has provided support for gold, as the market remains focused on the escalating trade conflict. “The central focus of the gold market continues to be the uncertainty surrounding Trump’s tariff policies,” said David Meger, Director of Metals Trading at High Ridge Futures.
In addition to trade concerns, the People’s Bank of China (PBOC) continued to bolster its gold reserves in January, marking the third consecutive month of purchases. China’s gold reserves increased to 73.45 million fine troy ounces at the end of January, up from 73.29 million the previous month. As the world’s largest gold consumer, China’s buying activity has further boosted prices. “The PBOC will likely continue to diversify its reserves in the long term, given the rising geopolitical uncertainty,” stated David Qu, economist at Bloomberg Economics.
However, U.S. economic data released by the Labor Department on Friday pointed to a strong labor market, which may influence the Federal Reserve’s interest rate decisions. The U.S. economy added 143,000 jobs in January, slightly below economists’ expectations of 170,000. Meanwhile, the unemployment rate fell to 4.0%, beating expectations. As a result, traders anticipate only one interest rate cut by the Fed this year, which could strengthen the U.S. dollar and weigh on the price of gold.
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