Gold price forecast has retreated to around $2,765 during early Monday’s Asian trading session. The renewed strength in the US Dollar (USD) is applying downward pressure on the precious metal. However, the downside appears to be limited due to the uncertainty surrounding US tariff policies and the cautious global market sentiment.
US Dollar Gains Strength on Trade Tariffs
The US Dollar has strengthened significantly after President Donald Trump initiated new tariff measures. On Sunday, Trump imposed retaliatory actions against Colombia, including tariffs and sanctions. These measures followed Colombia’s refusal to permit two US military planes, carrying deported migrants, to land. Trump announced an emergency 25% tariff on all Colombian imports, which is set to increase to 50% within a week.
This decision has weighed on the gold price forecast, a commodity priced in USD. As the dollar appreciates, the cost of gold for investors holding other currencies increases, thereby dampening demand.
Anticipation of the US Federal Reserve Decision
Gold traders are closely monitoring the upcoming Federal Reserve (Fed) meeting, scheduled for Wednesday. Expectations suggest that the Fed will likely maintain current interest rates. However, the Federal Open Market Committee (FOMC) press conference could provide critical insights into future rate policy.
Last week at the World Economic Forum, President Trump urged the Fed to implement an immediate interest rate cut, leading to a temporary USD decline and supporting gold prices. Should Fed officials adopt a hawkish stance during the meeting, gold prices could face additional downward pressure.
Limited Downside for Gold Amid Market Caution
Despite the USD’s resurgence, gold’s downside remains limited due to the broader market caution. Investors are wary of ongoing geopolitical tensions and economic uncertainty. Gold, often considered a safe-haven asset, typically benefits from such situations, providing some support to its price.
Conclusion
Gold prices are under pressure as the US Dollar regains momentum due to tariff-related developments. However, market caution and Federal Reserve’s upcoming decision will be crucial factors influencing the precious metal’s trajectory. Traders should stay alert to the evolving market dynamics to make informed decisions.
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