At 12:04 GMT, XAU/USD is trading $2723.29, up $15.39 or +0.57%.
Weaker Dollar Fuels Gold’s Strength
The U.S. dollar index fell 0.6% on Tuesday, trading near a two-week low. A weaker dollar made gold more attractive to foreign investors, as bullion becomes cheaper for holders of other currencies.
Later in the day, the dollar regained some ground as President Donald Trump floated the possibility of a 25% tariff on imports from Mexico and Canada. While this prompted a temporary rebound in the greenback, gold’s safe-haven appeal remained intact, supported by lingering concerns over trade policy uncertainty.
Safe-Haven Demand Drives Gold Higher
Gold’s role as a hedge against economic and geopolitical uncertainty has been a driving factor in its recent performance. Trump’s comments about potential tariffs on Canada, Mexico, and China heightened fears of global trade disruptions, prompting investors to shift capital into safe-haven assets like gold.
In addition, U.S. Treasury yields declined on Tuesday as markets absorbed the economic implications of Trump’s policy announcements. Investors showed risk-off sentiment following his signing of more than 40 executive orders, which has added to uncertainty surrounding his administration’s economic agenda.
Market Forecast for Gold Prices
Gold’s upward momentum and the breakout above $2,726.30 suggest a bullish outlook for the near term. If prices continue to rise, the market could test the all-time high of $2,790.17. However, resistance could emerge if the U.S. dollar strengthens further or if markets anticipate prolonged high interest rates from the Federal Reserve.