Trump tariffs target Canada and Mexico, driving demand for safe-haven assets and boosting gold prices.

After US President Trump announced his plans to impose a 25% tariff on Mexico and Canada early next month, gold prices edged higher. On Monday, gold prices continued to rise slightly as traders weighed the potential impact of the US imposing tariffs as high as 25% on its neighboring countries, approaching $2720 per ounce. As of the time of writing, spot gold rose 0.4% to $2718.81 per ounce, a slight increase of 0.2% on Monday. The Bloomberg Dollar Spot Index rose 0.4%. If implemented, this move could trigger a trade war. Trump also stated that he is still considering imposing universal tariffs on all foreign goods imported into the US, but he said he is "not ready yet." After Trump's speech, silver futures briefly surged, with prices for contracts expiring in March soaring 0.8% to $31.375 per ounce before falling back. Mexico is the largest silver mining country, and it is unclear whether the tariffs would apply to silver imports. Nevertheless, in recent weeks, both silver and gold have been at risk of being affected by comprehensive tariff measures, causing market turmoil as traders sell off short positions, pushing up the premiums on New York delivery futures. Investors are also weighing inflation prospects, with Trump's domestic agenda of tax cuts and increased spending potentially pointing towards sustained price pressures this year. This could limit the ability of the Federal Reserve to further ease monetary policy. Higher borrowing costs typically work against gold, as it does not yield interest. Driven by the Federal Reserve's shift towards loose monetary policy, geopolitical tensions, and central bank purchases, gold hit a series of record highs in 2024. Concerns over the new president's immigration policies and the increasingly tense relations between the US and other countries may further boost demand for safe-haven assets like gold. Elsewhere, traders are watching the impact of the long-delayed ceasefire agreement in Gaza, where Hamas released three female hostages in exchange for 90 Palestinians held in Israeli prisons.