Gold Climbs as Investors Assess Tariff Threats and Middle East Unrest

Gold Prices Climb Amid Dollar Weakness and Trade Uncertainty

Gold prices advanced as the US dollar lost ground and investors assessed ongoing ambiguity regarding American import tariffs and escalating tensions in the Middle East.

On Wednesday, gold rebounded by up to 1.3%, recovering much of the ground lost after a 1.6% drop the day before. The precious metal has been buoyed by unclear US trade policies and concerns over increased US military presence ahead of upcoming nuclear discussions with Iran.

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Gold has stabilized above $5,000 per ounce, having regained more than half of the losses from a significant two-day selloff earlier this month.

“A breakout to higher levels appears to be forming,” noted Yuxuan Tang, Asia macro strategy head at JP Morgan Private Bank. She cited ongoing tariff uncertainty and risks related to Iran as potential catalysts for a more lasting rally in gold prices.

In the United States, a broad 10% import tax introduced by Donald Trump took effect on Tuesday, following a Supreme Court decision that overturned his previous reciprocal tariff system. Although the president has threatened to increase the tariff to 15%, no official order has been issued yet.

The Trump administration is also preparing a series of national security reviews that could pave the way for more tariffs, focusing on imports such as batteries and industrial chemicals. At the same time, some importers are seeking refunds for tariffs already paid.

David Wilson, commodities strategy director at BNP Paribas SA, commented that these potential refunds could have significant effects on the US budget deficit, the dollar, and Treasury markets.

Growing concerns over rising government debt have prompted some investors to shift from bonds and currencies toward tangible assets like gold—a trend that fueled gold’s multi-year rally before the recent correction at the end of January.

However, the likelihood of US interest rates remaining steady in the near term could limit gold’s upside, as the metal does not generate interest income. According to Susan Collins, President of the Boston Fed, rates are expected to stay unchanged “for some time” due to recent improvements in US employment data.

Minutes from the Federal Reserve’s January meeting, released earlier this month, indicated that central bank officials remain cautious about lowering borrowing costs.

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As of 3:38 p.m. in Singapore, gold had risen 0.8% to $5,187.23 per ounce. Silver surged 3.8% to $90.47, platinum increased 4.8%, and palladium gained 0.9%. The Bloomberg Dollar Spot Index, which tracks the US currency, slipped 0.2%.

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