Gold (XAU/USD) remains resilient near $2,985 after briefly reaching a record high of $3,005 during early Asian trading on Monday. A weakening U.S. dollar and growing economic uncertainty fueled by escalating global trade tensions continue to support the precious metal, while investors await U.S. February retail sales data set for release later in the day.
The ongoing trade war between the U.S. and its key partners has unsettled financial markets, sparking fears of broader economic repercussions. Last Thursday, former U.S. President Donald Trump threatened to impose a 200% tariff on European imports of wine, cognac, and other alcoholic beverages. This move comes in response to the European Union’s plan to introduce tariffs on American whiskey and other U.S. products in April, a retaliation against Trump’s recent 25% duties on steel and aluminum imports.
Meanwhile, a softer U.S. dollar, driven by weaker-than-expected economic data, has also contributed to gold’s gains. The University of Michigan’s preliminary Consumer Sentiment Index plummeted to 57.9—its lowest level since November 2022—down from 64.7 in the previous reading and well below the market forecast of 63.1.
Geopolitical tensions further bolster demand for gold as a safe-haven asset. On Sunday, Yemen’s Houthi rebels claimed they had launched an attack on the USS Harry S. Truman aircraft carrier and its accompanying vessels in the northern Red Sea, using 18 ballistic and cruise missiles along with drones.
“Amid geopolitical uncertainty and ongoing tariff battles, gold remains an attractive investment,” noted Suki Cooper, a precious metals analyst at Standard Chartered.
However, any de-escalation of geopolitical tensions could put downward pressure on gold prices. The United States and Ukraine recently proposed a 30-day ceasefire with Russia, and Trump’s envoy Steve Witkoff suggested on Sunday that Trump might engage in direct talks with Russian President Vladimir Putin this week. According to Witkoff, Putin “accepts the philosophy” of Trump’s proposed peace terms, which could ease market fears and weigh on gold prices.
