EBC Markets Briefing | Gold slips after Trump imposed tariffs

Gold prices fell in early Asian hours on Monday, pressured by a stronger dollar as fears of a global trade war mounted after Donald Trump imposed sweeping tariffs on Canada, Mexico and China over the weekend.

Responding to concerns raised by oil refiners and Midwestern states, Trump imposed only a 10% duty on energy products from Canada, with Mexican energy imports facing the full 25% tariff.

The metal surged past $2,800 last week, setting a fresh record high in early 2025, fuelled by uncertainties around US tariffs. It has registered the biggest monthly gain since March 2024.

Traders looking to sell the dollar are far more common than thought despite the dollar’s dominance, said Morgan Stanley in January, citing lengthier fiscal negotiations by Congress and potentially softer inflation heading into March.

The bank’s strategist sees the US Dollar Index sliding to 105 by the end of Q1 and 101 by year-end, compared with the median forecasts of 108.7 and 106.9 suggested by a Bloomberg survey.

Fed Chair Jerome Powell said last week there would be no rush to cut interest rates again, contradicting Trump's earlier calls saying he wants borrowing costs to be lowered.

Gold saw some profit-booking after prices surpassed the key $2,800 mark. But with scale of the tariffs widely expected, bullion will likely retest the psychological resistance if staying above $2,760.

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