How Tariffs and Globals Conflict drive Gold

Gold prices have slipped to around $3,025 as of Monday’s early Asian trading session, continuing a downward trend from the record highs seen last Thursday. The decline comes as optimism grows over a potential peace deal in Ukraine, reducing the appeal of safe-haven assets like gold. Despite this, the precious metal’s losses could be tempered by signals from the US Federal Reserve (Fed) suggesting future interest rate cuts, alongside lingering economic uncertainties that might bolster its value.

Over the weekend, discussions between Ukrainian and US officials took place in Riyadh, Saudi Arabia, marking a renewed push to resolve the three-year conflict, spurred by US President Donald Trump’s call for a ceasefire. Ukraine’s Defence Minister, Rustem Umerov, described the talks as “productive and focused,” spotlighting plans to safeguard energy infrastructure and other critical facilities. Further negotiations are anticipated, with US and Russian representatives set to meet separately on Monday. This hopeful outlook for a Russia-Ukraine truce has softened demand for gold, traditionally sought after during times of instability.

​Meanwhile, the Fed’s recent decision to keep interest rates unchanged in January and March—while awaiting clearer signs of easing inflation—offers a counterbalance to gold’s decline. The central bank’s latest projections, released last week, hint at an average of two rate cuts in 2025, reflecting caution amid an uncertain economic landscape. Fed Chair Jerome Powell noted that President Trump’s proposed policies, such as import tariffs, could dampen US growth and fuel inflation. Alex Ebkarian, COO of Allegiance Gold, observed, “Gold isn’t fully serving as a safe-haven for retail investors yet, as we’re not technically in a recession. But a slowing economy might spark greater interest in such assets as uncertainty grows.” This dynamic suggests gold could still find support despite its current dip below $3,050.