Investing.com-- Gold prices fell from record highs on Monday, coming under pressure from a sharp rise in the dollar after U.S. President Donald Trump imposed trade tariffs on China, Canada, and Mexico.
But the yellow metal’s decline is expected to be short-lived, given that it was sitting on a strong run-up over the past week, as a rout in global equity markets and anticipation of Trump’s tariffs ramped up safe haven demand.
The dollar surged to a near one-month high, and was back in sight of an over two-year peak after the tariffs were confirmed.
Spot gold fell 0.7% to $2,780.56 an ounce, while gold futures expiring in April fell 0.8% to $2,810.30 an ounce by 23:38 ET (04:38 GMT). Spot prices hit a record high of $2,817.57 an ounce last week.
Gold pressured by dollar spike as tariffs point to higher inflation
Trump imposed 25% tariffs on Canadian and Mexican imports, along with a 10% duty on China. All three countries balked at the tariffs and vowed retaliation.
Trump had largely telegraphed the tariffs last week, before signing an executive order imposing them on Saturday. The tariffs will take effect from Tuesday.
The dollar rose sharply on the tariff news, pressuring metal markets.
Analysts were seen warning that the trade tariffs were likely to factor into higher U.S. inflation, giving the Federal Reserve less impetus to cut interest rates further. This could diminish gold’s long-term prospects, despite strong near-term safe haven demand.
Other precious metals retreated on this notion. Platinum futures fell 1.9% to $1,024.0 an ounce, while silver futures fell 1.5% to $31.795 an ounce. Both metals, like gold, had also risen sharply last week.
Among industrial metals, benchmark copper futures on the London Metal Exchange fell 1.1% to $8,944.25 a ton, while March copper futures fell 1.9% to $4.1960 a pound.
Copper was also pressured by softer-than-expected private purchasing managers index data from top importer China, as business activity remained soft in the first month of 2025.
JPMorgan (NYSE:JPM) reiterates bull case for gold
JPMorgan analysts said in a Monday note that they maintained their bullish view on gold in the medium-term, stating that risk aversion in broader markets could still drive investors into the yellow metal.
The investment bank still expects gold to rise to $3,000 an ounce by late-2025, stating that lower U.S. interest rates and a stabler, albeit slower economy, will drive flows into the yellow metal.
JPM is set to deliver about $4 billion worth of gold against futures contracts in February. The investment bank is by far the largest dealer of gold in the world.