Investing.com – Gold prices were largely muted on Thursday but held near three-month highs, as the U.S. dollar faced downward pressure after President Donald Trump avoided swift imposition of tariffs at the outset of his second term.
Spot Gold was largely unchanged at $2,755.14, near its highest level since late October, while Gold Futures expiring in February lost 0.3% to $2,763.39 an ounce by 01:35 ET (06:35 GMT).
The yellow metal saw three straight days of gains this week as safe-haven demand grew while traders tried to gauge Trump’s policies. His policies are expected to elevate inflation, and gold is seen as a hedge against inflation.
Weak dollar supports gold prices
The dollar had fallen sharply on Monday and has remained relatively weak this week as Trump avoided details on the imposition of U.S. trade tariffs, further supporting gold prices.
Trump said on Tuesday he was considering imposing 10% tariffs on Chinese imports from February 1, and also vowed to hit the European Union with tariffs. This showed that tariffs were expected to come at a gradual pace.
The increased tariffs will likely result in reduced trade imbalances and higher inflation in U.S., which are both dollar-positive.
The US Dollar Index was slightly weaker in Asian trade on Thursday.
A stronger dollar typically drives gold prices lower because it makes the metal costlier for buyers using other currencies.
The rise in bullion prices also reflects that markets are bracing for global uncertainty as Trump’s policy announcements and tariff declarations are expected to spark increased volatility.
Other precious metals fell on Thursday. Platinum Futures slipped 0.7% to $964.30 an ounce, while Silver Futures declined 0.6% to $31.218 an ounce.
Copper extends fall on tariff fears
Copper prices were falling amid heightened concerns over potential U.S. tariff escalations, which could dampen global economic growth and reduce demand for industrial metals.
Additionally, the looming tariff threats have stoked fears of weaker demand from China, the world's largest consumer of copper. Tariffs could further strain China's economy, already facing challenges from slowing industrial production and tepid domestic growth.
Benchmark Copper Futures on the London Metal Exchange fell 0.8% to $9,1673.50 a ton, while February Copper Futures dropped 0.9% to $4.2568 a pound.