Gold prices extended last week’s rebound during Asian trade on Monday, regaining ground above the US$3,350 level as renewed geopolitical and trade concerns supported demand for the safe-haven metal.
By 3:45 pm AEST (5:45 am GMT), spot gold was up $17.40, or 0.5%, at $3,367.34 per ounce, building on its recovery from last week’s six-day low of $3,310.
Gold’s recovery coincides with a consolidative phase in the United States dollar, which paused after a late Friday rebound. Investors now look ahead to U.S. Federal Reserve Chair Jerome Powell’s speech on Tuesday for further guidance.
With Monday's economic calendar relatively quiet, the focus remains on escalating tariff tensions between the U.S. and the European Union.
Despite a generally upbeat market tone driven by optimism around U.S. tech earnings - which Alphabet Inc. and others are due to report this week - uncertainty over U.S. tariff policy continues to drive demand for gold.
Investors are closely watching the approaching 1 August deadline for President Donald Trump’s tariff decision on E.U. imports. U.S. Commerce Secretary Howard Lutnick said Friday that he is confident a deal can be reached with the E.U.
The EU has warned of strong retaliation if a deal isn’t reached by the deadline, which could further strain transatlantic trade ties and keep gold well bid.
Political instability in Japan is also lending support to gold as the ruling coalition led by Prime Minister Shigeru Ishiba lost control of the upper house in Sunday’s election, weakening the government’s position ahead of critical trade decisions.
Gold also benefited late last week from dovish signals from the Federal Reserve. ANZ analysts said: “Gold rebounded [on] Friday to end the week unchanged as the spectre of rate cuts from the Fed increased. Federal Reserve Governor Chris Waller made his case for a rate cut, hinting that he would dissent if his colleagues voted to hold interest rates steady at their July meeting.
“Bond yields and the USD pushed lower on his comments, helping lift the precious metal higher.”
Further pressure on the dollar came amid continued public criticism of Fed Chair Powell by President Trump, which has also driven some traders to rotate into gold as a safer store of value.
