Gold prices rebounded on Tuesday, reclaiming ground above $2,900 an ounce, as the global market selloff that unsettled Wall Street showed signs of stabilizing. However, investor concerns about the U.S. economic outlook and trade policies persist.
The precious metal advanced after a slight decline on Monday, when President Donald Trump signaled that the economy could face initial setbacks as he reshapes trade policies through tariffs. This statement fueled fears of a potential recession. While gold is traditionally considered a safe-haven asset, it can experience pressure during sharp market downturns when investors seek liquidity.
So far this year, gold has surged 11%, repeatedly setting new record highs. The rally has been fueled by concerns over economic disruptions linked to the Trump administration, increased central bank purchases, and speculation that the Federal Reserve may implement further interest rate cuts. Lower borrowing costs typically enhance the appeal of non-yielding assets like gold.
Despite bullion’s strong performance, demand for physical gold has weakened in key Asian markets, including India and China. However, steady investment flows into gold-backed exchange-traded funds (ETFs) have continued to support the metal. According to Bloomberg data, ETF holdings reached their highest level since December 2023 last week.
“Gold finds itself without a solid physical-market floor amid lackluster demand in India and China,” Suki Cooper, an analyst at Standard Chartered Plc, noted in a report. However, she expects prices to reach new highs this year, with increased ETF investments needed to counterbalance the decline in physical demand.
As of 9:45 a.m. in London, spot gold rose 0.8% to $2,911.08 an ounce. Meanwhile, the Bloomberg Dollar Spot Index slipped 0.3%. Other precious metals, including silver, palladium, and platinum, also recorded gains.
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