Gold prices reached record highs on Monday, amid mounting trade tensions following US President Donald Trump’s announcement of a 25% tariff on all steel and aluminum imports.
These measures raise fears of slower global economic growth, leading to heightened market volatility. As a result, traders sought refuge in traditional safe havens like gold and the U.S. dollar.
This shift in sentiment is likely to persist, exerting pressure on the Canadian dollar and creating a clouded short-term outlook for the currency.
Investors are also bracing for key economic events this week, further contributing to a risk-averse sentiment. Federal Reserve Chair Powell’s testimony is set to be closely monitored as it could shape market sentiment over the coming weeks. A hawkish tone could temper gold gains, while dovish remarks could further boost gold prices. US inflation figures, scheduled for release later in the week, are also a focal point. The data could provide insights into inflationary pressures.
Meanwhile, de-escalating tensions in the Middle East will also play a crucial role in gold’s short-term outlook. Although easing tensions could curb demand for gold, the uncertainty surrounding Trump’s controversial proposal regarding Gaza might inject renewed volatility into the market.
