Gold prices break the $2,900 per ounce barrier

Gold prices continued moving in an upward trajectory on Monday, breaking through the $2,900 per ounce barrier and hitting an all-time high of $2,911 per ounce. If gold prices rise, they may encounter resistance at the psychological level of $2,950 per ounce, while if gold prices decline, support may be encountered near $2,770 per ounce. 

Gold prices maintained their bullish momentum on Monday, reaching a new all-time high of $2,911 per ounce. Uncertainty over US President Donald Trump’s future policies and trade tariffs promotes a risk aversion sentiment, raising the appeal of safe-haven assets, such as gold. Concerns that Trump’s trade policies may ignite global trading wars are raising the appeal of gold. 

US President Donald Trump has been using threats of imposing trade tariffs as a negotiation tool to further his agenda with other countries. Trump has threatened that he will announce reciprocal tariffs on many countries, which would raise US import taxes to match those imposed by the country’s other trading partners. On Monday, Trump announced a 25% tariff on steel and aluminum imports for all countries importing into the US, raising concerns over global trade wars. If Trump goes through with these heavy tariffs, global inflation is likely to rise, and the economic outlook will worsen, thus promoting a risk aversion sentiment that boosts safe-haven assets. 

Gold prices have been typically directed by the dollar’s movement, as the competing gold loses appeal as an investment when the dollar rises. The dollar gained strength on Monday, with the dollar index rising from 108.1 to 108.3. US treasury yields remained steady, with the US 10-year bond yielding 4.49%.    

Gold prices are under pressure by decreased Fed rate cut expectations. The US Federal Reserve held interest rates steady at its January meeting after delivering three consecutive rate cuts in 2024. FOMC policymakers voted unanimously to maintain the federal funds range to a target range of 4.25% to 4.50%. 

Fed Chair Jerome Powell delivered a mildly hawkish message after the policy meeting, putting pressure on gold prices. Powell stated that the Fed’s approach will remain data-driven and stressed that the central bank needs to consider potential policy changes under Trump’s administration.

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Written by:
Myrsini Giannouli

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