Gold prices traded largely unchanged on Monday, holding near three-week highs as geopolitical tensions and looming United States inflation data kept investors on edge.
The yellow metal briefly rose to US$3,374 per ounce in early trade, before retreating as markets digested the weekend’s developments in global trade policy.
By 3:35 pm AEST (5:35 am GMT), spot gold prices were flat at US$3,356.78 per ounce.
The early surge in gold came as a knee-jerk response to renewed trade tensions. Over the weekend, U.S. President Donald Trump announced plans to impose a 30% tariff on imports from the European Union and Mexico, effective 1 August.
The news triggered a wave of safe-haven buying in Asia, with traders reacting to the prospect of a broader global trade war.
However, the rally proved short-lived. Sentiment stabilised after European Commission President Ursula von der Leyen said late Sunday that the EU would extend its suspension of retaliatory measures until 1 August, as negotiations with the U.S. continue.
The absence of immediate EU retaliation helped the U.S. dollar recover some lost ground, pressuring gold back from its intraday peak.
Meanwhile, U.S. Treasury yields paused their recent climb, offering some support to gold. Still, market participants turned their focus to Tuesday’s release of the U.S. consumer price index (CPI), which is expected to provide key insights into whether the Federal Reserve might shift its current rate stance.
Investors are closely watching for signs of whether Trump’s tariffs are feeding into broader inflation. The CPI data will likely be pivotal in shaping expectations for monetary policy through the rest of the year.
According to the CME Group FedWatch Tool, markets are currently pricing in two 25 basis point cuts by year-end, with a 58.8% probability of a September move.
Also on the economic radar is China’s second-quarter GDP report, due out ahead of the U.S. inflation data. A strong showing from the world’s second-largest economy could further influence global sentiment and commodity demand.
Adding to geopolitical tensions, President Trump said on Sunday that the United States would deliver Patriot air defence missile systems to Ukraine.
He also indicated he would issue a “major statement” on Russia later Monday, fuelling speculation about further sanctions or foreign policy shifts.
