(Bloomberg) -- Gold rose after last week’s sharp correction, with investors weighing the economic outlook as US President Donald Trump prepares to implement import levies against key trade partners.
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Bullion traded above $2,870 an ounce on Monday, while a gauge of dollar’s strength against a basket of currencies fell. Trump is on the verge of hitting Canada and Mexico with 25% tariffs as soon as this week, and is planning on doubling a levy on China. There’s increasing concern the moves will undermine a US economy that already showing signs of cooling — a scenario which underscores the precious metal’s haven status.
Worries over economic growth have boosted market expectations for Federal Reserve interest-rate cuts, which would also add to bullion’s appeal as a non-yielding asset.
At the same time, concerns remain that Trump’s proposed tariffs will keep price pressures elevated — a view that saw the dollar surge last week. A stronger greenback makes dollar-denominated gold more expensive for foreign investors.
Recent US data has stoked fears the US may be entering a period of stagflation, when an economy faces both tepid growth and elevated prices. That could support gold, an asset regarded as a store of value in uncertain times.
Spot gold rose 0.5% to $2,873.03 an ounce at 11:44 a.m. in London, after ending last week 2.7% lower. The Bloomberg Dollar Spot Index eased 0.4%. Silver, palladium and platinum all gained.
--With assistance from Preeti Soni.
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