Gold hits 3-week high as tariff ruling, dollar weakness boost demand

Gold prices climbed to a three-week high on Monday as investors sought safety amid renewed uncertainty over US trade policy, geopolitical tensions, and interest-rate expectations.

Spot gold rose 0.93% to $5,151.44 per ounce after earlier reaching its highest level since January 30.

US gold futures for April delivery advanced 1.8% to $5,173.81.

The move came as the dollar weakened and risk sentiment deteriorated following a major US court ruling on tariffs and subsequent policy changes from Washington.

Wall Street futures and the US currency declined in Asian trading, reviving what market participants described as a “sell America” trade.

Tariff ruling fuels safe-haven demand

The rally followed a landmark decision by the US Supreme Court to strike down sweeping tariffs imposed under emergency powers legislation.

The ruling introduced fresh uncertainty for global trade and financial markets.

"The court's tariff ruling has, aside from earning the ire of the US president, added another layer of uncertainty to global markets, with traders again turning to gold as a defensive play," said Tim Waterer, chief market analyst at KCM Trade, in a Reuters report.

Despite the ruling, President Donald Trump said he would raise a temporary tariff from 10% to 15% on imports from all countries.

The policy uncertainty pressured the dollar and encouraged flows into bullion.

Waterer said future price direction may depend on how long trade tensions persist and geopolitical risks evolve. "Whether gold can claw its way back above $5,400 in the near-term may rest on how long tariff uncertainty lingers and whether the US engages in military action against Iran," he said.

Iran has indicated it may make concessions in nuclear negotiations with the United States in exchange for sanctions relief and recognition of its right to enrich uranium, as it seeks to avert a potential attack.

Inflation outlook and rate expectations

Macroeconomic data also supported gold’s appeal.

US inflation readings showed underlying price pressures rising more than expected in December, with signs pointing to further acceleration in January.

The trend reinforced expectations that the Federal Reserve may delay interest-rate cuts until at least June.

Higher rates typically weigh on non-yielding assets like gold, but policy uncertainty and concerns about slower growth have offset that effect by boosting demand for safe-haven assets.

Technical analysts also highlighted strengthening momentum.

Pepperstone research strategist Dilin Wu noted in a WSJ report that the metal recently broke through key levels of $5,100.

"This indicates that the previous key resistance has now become a short-term support, opening up further upside potential," Wu said.

He added that gold is trading above $5,150 per ounce and may encounter resistance near $5,200. "Overall, the bullish advantage is clear, though traders should remain alert to short-term volatility," Wu said.

Other precious metals follow higher

The broader precious-metals complex also advanced.

Spot silver climbed 2.12% to $86.44 per ounce, reaching a more than two-week high.

Platinum rose 0.28% to $2,168.48, while palladium edged down 0.46% to $1,750.