Gold prices rebounded on Monday as a weaker U.S. dollar and revived trade tensions renewed investor interest in safe-haven assets. Spot gold rose 0.7% to $3,223.55 an ounce (as of 0215 GMT), while U.S. gold futures climbed 1.3% to $3,228.70.
The recovery follows a sharp decline on Friday when gold dropped over 2%, marking its worst weekly performance since November. The dip was largely attributed to an increase in risk appetite following temporary optimism around U.S.-China trade relations.
However, the tide shifted after U.S. Treasury Secretary Scott Bessent reiterated President Donald Trump’s threat to impose tariffs on trade partners that fail to negotiate in “good faith.” The statement reignited fears of global trade disruptions, boosting safe-haven buying in gold.
Adding to the bullish sentiment was Moody’s decision to downgrade the U.S. credit rating by one notch, citing the country’s escalating debt levels. According to KCM Trade Chief Market Analyst Tim Waterer, “The downgrade and the resulting risk-off reaction have put some pep back into the gold price.”
The U.S. dollar weakened by 0.3% on Monday, further supporting gold prices by making the dollar-denominated metal more attractive to investors using other currencies.
Economic data released last week also pointed toward a slowing U.S. economy, with producer prices unexpectedly falling, retail sales growth decelerating, and consumer prices rising below expectations. These indicators have reignited speculation about possible interest rate cuts by the Federal Reserve later this year.
“I think we could be looking at a July or September rate cut,” Waterer said. “But how Trump’s trade negotiations fare in the interim could be a determining factor.”
Other precious metals also saw gains: spot silver rose 0.5% to $32.42 per ounce, platinum edged up 0.3% to $990.71, and palladium climbed 0.5% to $965.23.
