Gold slips as investors opt for dollar amid escalating trade war concerns

Gold prices fell more than 2% on Monday, with investors turning to the dollar as a safe haven after sweeping US tariffs raised fears of a global recession.

Analysts, however, remained bullish on bullion, given the challenging economic conditions.

Spot gold was down 2.4% to USD 2,963.19 an ounce as of 1:36 p.m. ET (1736 GMT), after hitting a near four-week low of USD 2,955.89 earlier in the session. US gold futures settled 2% lower at USD 2,973.60.

“Gold retreats as investors turn to cash and other safe havens like the Swiss Franc and the Japanese Yen amid market turmoil, creating a risk of deeper corrections,” said Nikos Tzabouras, senior market analyst at Tradu.com.

The dollar rose against its rivals, moving away from a six-month low touched last week. A stronger greenback makes gold more expensive for other currency holders.

“We’re getting a lot of stress in the gold market because of liquidity concerns and margin covering by speculators,” said Bart Melek, head of commodity strategies at TD Securities.

Major stock indexes fell in volatile trading after US President Donald Trump warned of a 50% tariff on China if it doesn’t drop its retaliatory tariffs.

Meanwhile, the White House labelled reports of Trump considering a 90-day pause on tariffs for all countries except China “fake news”.

Futures now point to around 120 basis points’ worth of interest rate cuts by the US Federal Reserve by December, with markets pricing in about a 37% chance of a US rate cut in May.

Lower rates increase the appeal of bullion as it yields no interest.

Gold, used as a safe investment during times of political and financial uncertainty, scaled an all-time peak of USD 3,167.57 last Thursday, boosted by strong safe-haven inflows amid geopolitical uncertainties and strong central bank demand.

Spot silver rose 0.5% to USD 29.71 an ounce, recovering from a near seven-month low hit earlier in the day.

Spot platinum fell 1% to USD 907.09, while palladium eased 0.9% to USD 903.19.

(Reporting by Brijesh Patel, Anmol Choubey, and Ishaan Arora in Bengaluru; Editing by Susan Fenton, Shailesh Kuber, and Mohammed Safi Shamsi)