Gold recovered from the biggest intraday decline in two months, returning to the key $2,900 level, as fears of an impending trade war continue to support safe-haven demand.
In late afternoon trading on Monday, US gold for delivery in April was exchanging hands for $2,911 an ounce, up 0.4% in holiday-thinned dealings.
The gains came even after the 14-day relative strength index — a gauge of the pace and intensity of moves — showed the precious metal reached overbought levels in recent sessions.
Meanwhile, the US dollar hovered near a two-month low, making bullion less expensive for buyers holding other currencies.
“Gold is still benefiting from investors looking for safe-haven assets amid concerns of a tariffs and trade war,” UBS analyst Giovanni Staunovo said.
“We continue to see upside for gold, with the yellow metal expected to rise to $3,000, benefiting also from ongoing central bank demand,” he added.
On Friday, US President Donald Trump kept to his drumbeat of tariff threats, saying levies on automobiles would be coming as soon as April 2. It was the latest in a series of trade actions he has unveiled since returning to office.
Focus was also on developments towards talks over the Ukraine war. US Secretary of State Marco Rubio said on Sunday that Kyiv and Europe would be part of any “real negotiations” to end Russia’s war in Ukraine.
“We remain watchful of possible lower central bank demand (for gold) that may arise in the event of a potential Russia/Ukraine peace deal,” said Morgan Stanley in a note dated Friday.
Traders were also studying the latest US economic data for clues about the Federal Reserve’s likely easing path, after a report on Friday showed retail sales slumped by the most in nearly two years. This prompted traders to restore bets that the central bank will cut interest rates by September.
Money managers cut their bullish wagers on gold to a four-week low in the week ending Feb. 11, according to the latest Commodity Futures Trading Commission report on Friday.
Despite Friday’s fall, bullion still notched its seventh consecutive weekly advance, the longest winning streak since 2020.
