Gold prices (XAU/USD) continued their upward momentum on Monday, climbing to around $3,090 during the early Asian session. The precious metal remains near record levels as investors seek safety amid escalating concerns over a global trade war triggered by former U.S. President Donald Trump’s latest tariff measures.
Last week, Trump announced a 25% tariff on imported cars and light trucks, set to take effect on April 3. This move follows a flat 25% tariff on steel and aluminum and an expected reciprocal tariff announcement on Wednesday. The heightened trade tensions and economic uncertainty have driven investors toward gold, a traditional safe-haven asset.
Inflation Concerns and Economic Outlook
Economic data released by the Bureau of Economic Analysis on Friday indicated persistent inflationary pressures. The U.S. core Personal Consumption Expenditures (PCE) Price Index rose 0.4% month-over-month in February, exceeding the 0.3% forecast. On an annual basis, core PCE climbed to 2.8%, up from a revised 2.7% in January.
While the data highlights stubborn inflation, Trump’s aggressive trade policies have sparked fears of potential stagflation or even recession. This uncertainty has weakened the U.S. dollar, making gold—a USD-denominated commodity—more attractive to investors.
Market Focus
Traders will closely watch the U.S. ISM Manufacturing Purchasing Managers Index (PMI) for March, set for release on Tuesday. A stronger-than-expected reading could support the U.S. dollar and potentially limit gold’s upside momentum.
