Gold prices surged to $2,770.88 per ounce on Friday, nearing its all-time high of $2,790.17 set last October. This significant increase is primarily due to the weakening US dollar and market uncertainty fueled by President Trump’s recent policy statements.
The dollar experienced its worst weekly performance in over a year, dropping 1.77% to 107.465 on the dollar index. This decline followed Trump’s remarks suggesting that upcoming tariffs might be less severe than initially anticipated, easing trade war concerns and shifting investor focus to potential inflationary pressures. As a traditional safe-haven asset and inflation hedge, gold consequently saw increased demand.
Trump’s call for lower interest rates at the World Economic Forum further contributed to the dollar’s weakness. A weaker dollar makes gold more affordable for international buyers, driving up demand.
Uncertainty surrounding Trump’s trade rhetoric, including the possibility of a “friendly” resolution with China, has left markets speculating on the extent of future tariffs. The anticipation of upcoming tariff announcements by February 1st regarding Canada, Mexico, China, and the European Union has added to market uncertainty, diverting attention from the upcoming Federal Reserve meeting. The expectation that the Fed will maintain current interest rates has strengthened gold’s appeal in a low-yield environment.
Analysts predict that gold’s upward momentum could lead to a retest of its all-time high. The continued weakness of the dollar, combined with ongoing uncertainty surrounding trade policy, creates a positive outlook for further price increases. However, future tariff announcements and shifts in overall market sentiment will be crucial factors influencing gold’s price in the coming week.
