Gold Bounces Back
Gold ticked up a modest 0.2% today, reclaiming the $2,640 per ounce milestone after two days of falling.
Why the dip kicked in
Since President Donald Trump secured a second term, the US dollar has gotten a leg up, thanks to buzz around more protectionist trade rules, especially targeting China.
Trade war on the horizon
- Trump’s aides are weighing tariffs on almost all nations, sparing only vital imports.
- Expectations are high that China, the EU, Canada, and Mexico will face huge duties.
- “I’m not backing down,” Trump said in response to The Washington Post’s article about the looming tariffs.
Experts differ over how these tariffs will push inflation up. Meanwhile, the Treasury market is betting that rate cuts will be slow—keeping gold lower.
The Fed’s caution
Federal Reserve Chairman Jerome Powell remains wary, and that caution keeps rates high. The 10‑year Treasury yield is near a May‑high at 4.62%. The probability of a rate cut this month is just 7%, and less than 40% for March according to the CME FedWatch Tool.
Middle East drama and the gold connection
With Trump in office, looming tensions in the Middle East could influence gold.
- Agencies advice: the “maximum pressure” strategy may not stop Iran, given its nuclear progress.
- Russia remains a potential deal‑breaker in a military strike on Iran’s nuclear sites.
- If Israel and U.S. teams strike, it could shake up Hezbollah’s supply route and cripple Iran’s economy.
While these potential chaos scenarios can spur safe‑haven buying (gold), the upside might be fragile—because any escalation could counteract the wrts between aggressive military prep and economic downturns.
Quick Takeaway
Gold’s slight rebound today is a tiny relief in a landscape where on the 1st of January, President Trump’s re‑election—combined with possible tariffs and regional tension—has steered markets in a direction that keeps safe havens on the edge of relevance. Keep watching.
