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Gold rises on weaker dollar and Trump tariff threats

Gold rises on weaker dollar and Trump tariff threats

Gold prices rose above $2,900 an ounce on Sunday, supported by the weaker dollar, and fears of a possible trade war after U.S. president Donald Trump threatened to impose reciprocal tariffs.

As of 2:10 pm, spot gold was up by 0.5% at $2,897.49. ET (1910 GMT), reversing a recent intraday high $2,906.38. Last week, it reached a record-high of $2.942.70.

U.S. Gold Futures rose 0.3% to $2.910.30.

The U.S. Dollar hovered around a two-month high, lowering the price of bullion for buyers who hold other currencies.

The UBS analyst Giovanni Staunovo stated that "gold is still benefiting because investors are looking for safe haven assets amid fears of tariffs and a trade war."

Gold is expected to reach $3,000 in the near future, boosted by central bank demand.

Trump continued to threaten tariffs in his Friday remarks, stating that levies against automobiles could be implemented as early as April 2. This was just the latest of a number of trade measures he announced since assuming office for the second.

Ukraine peace talks became a major market focus. U.S. Secretary Marco Rubio stated on Sunday that Kyiv, and Europe will be included in any "real negotiation" to end Russia’s war in Ukraine.

Morgan Stanley said in a Friday note that it was "watchful" of any possible decrease in central bank demand for gold in the event of an eventual Russia/Ukraine Peace Deal.

Bullion has traditionally been viewed as an investment that protects against inflation, geopolitical uncertainty and other risks. However, higher interest rates have diminished the appeal of non-yielding gold.

Later in the week, Federal Reserve officials will speak and market participants are on alert for any clues about the direction of U.S. rates. The U.S. market is closed on Presidents' Day.

Silver spot rose 0.8%, to $32.40 per ounce, after reaching its highest level since October 31, on Friday.

Palladium rose 1.4%, to $974.99. Platinum dropped 0.1% at $979.07.

(source: Reuters)