Gold prices opened higher above an all-time high of over $4,670 following support for momentum from pressure from US President Donald Trump who imposed tariffs on eight European countries due to opposing him in the acquisition of Greenland.
At 9.40 am, gold prices were at $4,658, up 1.32% since it opened in early trading on Monday in the Asian session.
US President Donald Trump announced the implementation of a 10% tariff on imported goods from several European countries including Denmark, Sweden, France, Germany, the Netherlands and Finland, in addition to the United Kingdom (UK) and Norway, effective February 1.
The move was linked to demands that the US be allowed to buy Greenland, thus sparking concerns of transatlantic trade tensions.
The announcement increased the risk of retaliation from Europe, prompting investors to turn to safe assets such as gold due to the increasing uncertainty of global trade policies.
In a related development, European Union (EU) ambassadors on Sunday reached a preliminary agreement to step up diplomatic efforts to block the implementation of the tariffs.
At the same time, the EU is also preparing for retaliatory measures if the duties are continued by Washington.
However, market sentiment is also influenced by the development of stronger US economic data. The improvement in the US labor market has reduced the implied probability of a rate cut by the Federal Reserve (Fed) in the near term.
Fed funds futures now show that the rate cut expectations have been moved to June and September, compared to the initial projections in January and April. This change reflects the view that the Fed is likely to keep interest rates higher for a longer period.
The situation generally supports the strengthening of the US dollar (USD), but at the same time puts pressure on non-yielding assets such as gold, although the demand for safe assets remains supported by geopolitical and global trade risks.
