Gold (XAU/USD) fell below $2,770 at the time of writing on Monday after a headline-filled weekend and a busy week on the central bank’s decision on interest rates. Over the weekend, markets understood why U.S. President Donald Trump eased the use of tariffs as a tool. It looks like tariffs will be used as leverage, for example, for countries that refuse to accept deported U.S. immigrants who are returned home Original.
Colombia tasted the game on Sunday when President Trump ordered emergency tariffs of 25%, increasing to 50% within a week, as the country did not comply with President Trump’s demands for deportation. However, the White House later confirmed that “Colombia has agreed to all of President Donald Trump’s conditions, including unrestricted admission of all undocumented people from Colombia returning from the United States,” and that Trump’s proposed tariffs are “now pending.”
Later this week, the Fed and the European Central Bank will decide interest rates on Wednesday and Thursday, respectively. Meanwhile, a Chinese open-source artificial intelligence startup is scaring markets and raising questions about the high valuations of tech stocks such as Nvidia, dragging the Nasdaq lower.
Gold prices stalled and are set to collide with this Monday’s border after President Donald Trump clarified over the weekend how and when he would use tariffs. This was enough to cause some panic in the markets, as it became clear that President Trump is not at all easing tariffs. Meanwhile, gold has reached overbought levels in the Relative Strength Index (RSI) on the daily chart and may see further selling pressure so far.
The price of gold fell in the global and local markets
In the global bullion market, the price of an ounce of gold fell by $3 to $2,767. Meanwhile, in the domestic markets, the price of 24-carat gold per tola fell by 300 rupees, reaching 289,100 rupees. The price of gold per 10 grams fell by 257 rupees, to 227,209 rupees.
Similarly, the price of silver per tola fell by 14 rupees, to 3.395 rupees, and the price of 10 grams of silver also fell by 12 rupees, to 2.910 rupees.
Gold prices fell on Monday as the U.S. dollar held steady, while investors turned their attention to the Federal Reserve’s first monetary policy meeting of the year for clues on the future of interest rates.
Spot gold fell 0.3% to $2,764.21 an ounce by 1010 GMT, retreating from record highs close to Friday. U.S. gold futures fell 0.4% to $2,769.30.
The dollar rose 0.1%, making dollar-priced gold more expensive for holders of other currencies.
Han Tan, chief market analyst at Xinity Group, said: “The resilience of the US dollar in the wake of the tariff saga between the US and Colombia has pushed gold prices lower. Spot gold also poised for a technical downturn, even though its recent push to reach a new record did not materialize.
The United States and Colombia succeeded in defusing tensions over a possible trade war after Colombia agreed to accept military aircraft carrying deported migrants.
Historically, gold has served as a reliable hedge against geopolitical uncertainty and inflation, thriving in a low-interest rate environment where its lack of yield becomes less disadvantaged.
Interest rates are stable and gold is approaching $2,800
Fed policymakers largely expect to keep interest rates steady at the end of their meeting on January 28-29. This will mark the first pause in the rate-cut cycle that began last September.
Meanwhile, the European Central Bank is set to cut interest rates by another 25 basis points on Thursday. Elsewhere, spot silver fell 0.5% to $30.46 an ounce, after recording a 0.9% increase last week.
Frank Watson, market analyst at Kinesis Money, said in a note: “The gold-to-silver ratio rose again above 90 last week, above its average of around 85 over the past three years, suggesting that silver may have the potential to make more gains compared to gold.” Palladium fell 1.6% to $971.75, and platinum added 0.1% to $949.85
Gold prices fell on Monday as the dollar regained its level after U.S. President Donald Trump briefly imposed tariffs on Colombia. Meanwhile, gold has reached overbought levels in the Relative Strength Index (RSI) on the daily chart and may see further selling pressure so far.
The move towards tariffs, even if temporary, has strengthened the value of the dollar, thus exerting downward pressure on the price of gold.
A stronger dollar makes dollar-priced goods more expensive for overseas buyers, thereby reducing demand. April’s most active gold contract fell 0.6% around $2,790 an ounce.
On Sunday, President Trump imposed 25% tariffs on all Colombian imports, escalating them to 50% within a week after the South American country refused to allow two military planes carrying deported migrants to land as part of the new US administration’s immigration campaign.
