•Activity of Correction Operations and Profit Taking
•Safe Haven Demand Curbs Losses
•Escalating Global Trade Tensions
Gold prices fell in the European market on Monday for the first time in the last three days, giving up their highest levels ever, amidst activity of correction operations and profit taking, and due to the pressure of the broad rise in the US dollar levels against a basket of global currencies.
The aggravation of losses is curbed by aversion to risk in the markets, with increasing demand for safe haven assets, in light of the escalation of global trade tensions, after the United States imposed customs duties on Canada, Mexico and China, which will come into effect tomorrow, Tuesday.
Price view
•Gold prices today: Gold prices fell by about 0.95% to ($2,772.28), from the opening level of trading at ($2,798.81), and recorded the highest level at ($2,804.35).
• At the settlement of prices on Friday, gold prices achieved a rise of 0.15%, in the second daily gain in a row, and recorded its highest levels ever at $ 2,817.22 per ounce, thanks to strong investment demand for gold bullion.
• Gold prices achieved a rise of 1.0% last week, in the fifth weekly gain in a row, thanks to the global monetary easing cycle, and the escalation of trade tensions.
US Dollar
The dollar index rose on Monday by 1.3%, extending its gains for the fifth consecutive session, recording its highest level in three weeks at 109.88 points, reflecting the continued rise in the levels of the US currency against a basket of major and minor currencies.
This rise comes after US President Donald Trump carried out his threat to impose tariffs on Canada, Mexico and China, and these tariffs are expected to lead to an escalation of inflationary pressures again, which will push the Federal Reserve to keep interest rates high for a longer period.
Trump Tariffs
US President Donald Trump on Saturday imposed 25% tariffs on Canadian and Mexican imports and 10% on Chinese goods starting Feb. 4. White House officials said there would be no exemptions from the tariffs.
Canada and Mexico have ordered retaliatory measures, while China said it would challenge the tariffs at the World Trade Organization and take unspecified countermeasures.
Gold Outlook
•Reliance Securities senior analyst Jigar Trivedi said while the tariff announcements were supposed to boost gold prices due to increased safe-haven demand, a stronger dollar and expectations of fewer rate cuts are putting more pressure.
•City Index senior analyst Matt Simpson said: “This emotional reaction may be short-lived and I think gold will continue to outperform this year, given the threat of inflation and the next round of trade wars looming.
