Gold prices lifted during Tuesday's Asian trade, approaching three-week highs as geopolitical tensions and inflation uncertainty supported safe-haven demand.
By 3:50 pm AEST (5:50 am GMT), spot gold had risen by $21.47, or 0.6%, to US$3,365.01 per ounce, boosted in part by threats from United States President Donald Trump to impose fresh 100% tariffs on Russian goods unless Moscow agrees to end its war in Ukraine within 50 days.
Markets interpreted the announcement as an escalation in geopolitical risk, which historically increases demand for gold as a hedge against uncertainty.
However, while gold is gaining near-term traction, the cautious stance of the U.S. Federal Reserve may limit further upside.
Fed Chair Jerome Powell has warned that tariffs could push up inflation over the summer, potentially delaying any interest rate cuts.
Chicago Fed President Austan Goolsbee reinforced this outlook, stating in an interview with The Wall Street Journal that Trump’s newly unveiled tariffs have complicated the inflation picture. He added that this uncertainty makes it more difficult to support the rate cuts Trump has advocated.
Attention now turns to the U.S. consumer price index (CPI) inflation data for June, due later on Tuesday. The report is expected to show a slight pickup in inflation, though a weaker-than-expected print could revive expectations of earlier Fed rate cuts.
