Gold prices rose by 0.35% as the dollar weakened, with investors closely watching U.S. President Donald Trump's proposed reciprocal tariffs, which could escalate global trade tensions.
The US Dollar Currency Index (DXY) hovered near a two-month low, making gold more affordable for non-dollar holders.
On Friday, Trump reaffirmed plans to impose auto tariffs by April 2 and directed officials to develop country-specific reciprocal levies, with recommendations due by April 1. Analysts suggest these threats may be a negotiating tactic rather than a firm policy shift.
While gold is traditionally a hedge against geopolitical uncertainty, its momentum may slow if progress is made in U.S.-Russia negotiations to end the Ukraine war.
However, concerns over inflation and trade policies could sustain gold’s rally even if safe-haven flows recede. Recent weak U.S. retail sales data has also revived expectations of a Federal Reserve rate cut by September. Lower interest rates typically support gold, as the metal doesn’t yield interest.
Despite falling 1.6% on Friday—its sharpest drop in two months—gold remains on a strong uptrend. It marked its seventh consecutive weekly gain, the longest streak since 2020, and hit an all-time high of $2,942.68 per ounce last Tuesday.
Gold has also been supported by continued central bank buying, particularly from China, and rising investments in bullion-backed exchange-traded funds.
With trade policy uncertainties, inflation concerns, and Fed rate expectations in focus, gold remains a key asset for investors navigating market volatility.