Gold prices hit an over 11-week peak on Wednesday, not far from an all-time peak touched last year, boosted by safe haven demand stemming from uncertainty surrounding U.S. President Donald Trump’s trade policies and a softer dollar.
Spot gold added 0.3% to $2,751.89 per ounce as of 0502 GMT, after hitting its highest since Nov. 1 earlier in the session and closing in on its record peak of $2,790.15 hit in October.
U.S. gold futures gained 0.3% to $2,768.40.
“There is still some uncertainty regarding when Trump wants to implement his policies on major trading partners of the U.S., causing a lot of uncertainty in direction of dollar, which is the primary short-term catalyst driving bullish tone in gold price,” said Kelvin Wong, OANDA’s senior market analyst for Asia Pacific.
A weaker dollar makes gold more attractive for holders of other currencies. Gold is considered a safe investment during economic and geopolitical uncertainty.
Trump vowed to hit the European Union with tariffs and said his administration was discussing a 10% tariff on goods imported from China starting Feb. 1.
Gold’s appeal as an inflation hedge may be diminished if Trump’s policies, which are seen as inflationary, lead the Federal Reserve to maintain interest rates higher for longer. Higher interest rates dampen non-yielding gold’s appeal.
The Fed meets next week with one eye on the new Trump administration’s policies and another on the bond market that has ratcheted up borrowing costs even as U.S. central bankers have been cutting rates.
It is expected to hold its benchmark rate steady at the meeting.
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“Macro and trade uncertainty and the prospects of a deteriorating fiscal situation are supporting haven demand. Central bank purchases set a strong demand base, but we expect investment demand to lift, offsetting losses in physical demand,” ANZ said in a note.
Spot silver edged up 0.1% to $30.91 per ounce.
Palladium rose 0.6% to $963.59 and platinum climbed 0.6% to $948.94.
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