Gold prices rose on Monday, buoyed by a weaker U.S. dollar and renewed safe-haven demand after Treasury Secretary Scott Bessent reaffirmed President Donald Trump’s threats to impose tariffs on non-compliant trade partners.
Spot gold was up 0.4% at $3,216.29 per ounce as of 0445 GMT, while U.S. gold futures gained 1% to $3,219.20. The advance comes after a sharp 2% drop on Friday that capped the metal’s worst weekly performance since November, amid improved risk sentiment driven by the U.S.-China trade agreement.
The U.S. dollar index (.DXY) slipped 0.3%, making gold more attractive to holders of other currencies and adding tailwinds to bullion’s rebound.
Safe-Haven Appeal Returns After Moody’s Downgrade
“The Moody’s downgrade of the U.S. credit rating, and the corresponding risk-off reaction by the market, has put some pep back into the gold price,” said Tim Waterer, Chief Market Analyst at KCM Trade.
On Friday, Moody’s downgraded the U.S. sovereign credit rating by one notch, becoming the last of the three major agencies to strip the country of its top-tier rating. The agency cited growing concerns over Washington’s mounting debt burden.
Trump’s Tariff Threats Stir Market Jitters
In television interviews over the weekend, Treasury Secretary Bessent reiterated that President Trump would enforce tariff hikes against trade partners that fail to negotiate in “good faith.” These comments have reawakened fears of a new round of trade disruptions.
Trump’s confrontational trade stance—branded as “strategic uncertainty” by Bessent—has previously unsettled global markets and undermined investor confidence.
Gold, a traditional hedge during periods of geopolitical and financial instability, tends to benefit from such uncertainty, especially in an environment of weakening growth and softening interest rate expectations.
Fed Outlook in Focus
Recent U.S. economic data has reinforced expectations of potential rate cuts later this year. Producer prices unexpectedly fell in April, while retail sales growth slowed. Additionally, consumer prices rose less than anticipated, suggesting inflationary pressures may be moderating.
“I think we could be looking at a July or September rate cut, but how Trump’s trade negotiations fare in the interim could be a determining factor for when the Fed next lowers rates,” Waterer added.
Other Precious Metals
Silver edged up 0.1% to $32.31 per ounce
Platinum rose 0.2% to $989.31
Palladium gained 0.3% to $963.94
All eyes will remain on U.S. economic signals and global trade developments, with gold likely to remain reactive to any shifts in investor sentiment or policy direction.
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