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What’s happening: Gold and silver prices rose on Monday, with growing geopolitical uncertainty.
What happened: Gold and silver started trading on Monday under pressure, with investors rotating their funds into undervalued stocks after a month of decline.
President Donald Trump’s tariff announcements and the growing rift between the US and Europe over Ukraine led investors to flock back to safe havens.
Why it matters: Gold prices surged more than 2% in February, reaching $2,858 per ounce, after US President Donald Trump began his second term with several announcements that triggered investor concern.
Markets turned to safe-haven options on US tariff policies and growing geopolitical tensions after President Donald Trump stepped in to end the Russia-Ukraine war.
On Friday, Trump said that the 25% tariffs previously announced on Canada and Mexico would proceed as planned and come into effect on March 4. The US also plans to levy additional tariffs on China, apart from the 10% already announced. The EU has been on tenterhooks after the Trump administration indicated that tariffs could be levied on goods from the bloc.
There has been a widening rift between the US and the EU regarding a peace deal between Russia and Ukraine. While Europe is keen on guaranteeing Ukraine’s security, the region believes Trump is siding with Russian President Vladimir Putin. After the meeting between Trump and Ukrainian President Volodymyr Zelensky at the Oval Office went south, the US President halted aid to the war-torn country.
Weakness in the US dollar lent further support to gold prices, as a lower greenback makes metals cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.87% to 106.68 on Monday.
Gold prices rose 1.73% to $2,897.70 an ounce on Monday, while silver prices spiked 2.43% to $32.26.
What to watch: Investors will continue monitoring tariff announcements by the Trump administration and their impact on global trade dynamics.
Trump’s discussions with Europe regarding the Russia-Ukraine peace deal will also be in focus. Markets will watch movements in the US dollar as well.
Context: The AUD/USD forex pair rose on Monday after Australia released PMI data.
Details: The AUD/USD pair climbed on Monday on optimism around the Australian economy. Although the S&P Global Australia Manufacturing PMI was revised lower to 50.4 in February, from a preliminary reading of 50.6, it remained above 50.2 in the previous month.
The latest reading not only signalled a second consecutive month of expansion in Australia’s manufacturing sector, but it also marked the strongest growth since February 2023.
Another data release showed corporate profits in Australia rising by 5.9% in the fourth quarter of 2024, accelerating from 4.9% in the previous quarter. The figure came in significantly higher than market expectations of 1.5% growth.
Weakness in the US dollar also lent support to the AUD/USD forex pair. The US dollar came under pressure on rising speculations of the Federal Reserve cutting interest rates at its upcoming meeting in June.
US President Donald Trump’s announcement of plans to impose additional tariffs on China limited the gains for the Aussie, as the Asian nation is Australia’s largest trading partner.
The AUD/USD forex pair rose by 0.14% to 0.6217 on Monday. Meanwhile, the ASX 200 climbed 0.90% to close at 8,245.70.
Earlier this morning, Australia reported retail sales growth of 0.3% in January, versus the 0.1% decline recorded in the previous month. Also, the country’s current account deficit contracted to $12.5 billion in the fourth quarter, from $13.9 billion the previous quarter. The latest reading marked the lowest current account deficit since the first quarter of 2024.
What to watch: Investors will monitor Australia’s fourth-quarter GDP growth data, scheduled to be released on Wednesday. The Australian economy had expanded by 0.8% year-on-year in the third quarter, easing from 1.1% growth in the previous period. The figure had missed market expectations of 1.1% growth.
Other Markets: European trading indices closed higher on Monday, with the Stoxx 600, FTSE 100, DAX and CAC 40 up by 1.07%, 0.70%, 2.64% and 1.09%, respectively.
The US paused military aid to Ukraine, after President Donald Trump took offense from Ukrainian President Volodymyr Zelensky saying that the end of the war with Russia is “very far away.” The news sent the RUB/USD pair higher in forex trading this morning.
Italy’s new passenger car registrations contracted by 6.3% in February, accelerating from a decline of 5.9% in the previous month. January of 2025. The decline being steeper than market expectations of 4.3% exerted pressure on the EUR/USD forex pair.
New Zealand’s number of new building permits rose by 2.6% to 2,768 units in January, after declining by 5.6% in the previous month. However, the figure missing market expectations of 3% growth sent the NZD/USD pair lower in forex trading this morning.
South Korea’s retail sales fell by 0.6% in January, compared to December’s 0.2% growth. The latest figure missed market estimates of 0.4% growth, exerting pressure on the KRW/USD forex pair.
Japan’s unemployment rate stood at 2.5% in January, slightly above the 2.4% recorded in the previous month. The figure coming in worse than market estimates of 2.4% sent the JPY/USD pair slightly lower in forex trading this morning.
Spain’s unemployment change and tourist arrivals (12:00 UAE Time), Cyprus’ retail sales (13:00 UAE Time), Greece’s manufacturing PMI (13:00 UAE Time), Italy’s unemployment rate (13:00 UAE Time), South Africa’s GDP growth (13:30 UAE Time), Eurozone’s unemployment rate (14:00 UAE Time), Greece’s unemployment rate (14:00 UAE Time), Ireland’s construction output (15:00 UAE Time), Israel’s tourist arrivals (15:30 UAE Time), US Redbook (17:55 UAE Time), and Denmark’s foreign exchange reserves (20:00 UAE Time).
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