Gold prices declined in Asian trading on Monday following sharp gains last week, as the U.S. dollar strengthened after President Donald Trump imposed temporary tariffs on imports from Colombia. Markets remained cautious ahead of the upcoming U.S. Federal Reserve meeting this week, which is expected to outline future monetary policies.
Spot gold prices fell 0.7% to $2,752.09 per ounce, while February gold futures dropped 0.8% to $2,783.22 per ounce. Last week, gold posted gains of nearly 3%, driven by Trump’s calls for interest rate cuts and expectations of gradual U.S. tariffs.
Analysts noted that the renewed strength of the U.S. dollar, fueled by escalations between the United States and Colombia, contributed to the morning’s decline in gold prices.
The crisis began when Trump imposed a 25% tariff on Colombian imports after Colombian President Gustavo Petro refused to accept U.S. deportation flights. However, after Petro proposed using the Colombian presidential plane to accept deportees, Trump temporarily suspended the tariffs, easing diplomatic tensions.
Amid these developments, the U.S. dollar index rose 0.3% in Asian trading following its worst week in two months. A stronger dollar typically weighs on gold prices as it makes the precious metal more expensive for buyers using other currencies.
Investors remain cautious ahead of the Federal Reserve meeting, which is expected to maintain interest rates but could signal rate cuts in June 2025. Gold prices generally decline during periods of rising interest rates, as the yellow metal becomes less attractive compared to yield-bearing investments.
In a similar trend, other precious metals also weakened due to the strong dollar. Silver futures fell 1.7%, settling at $30.655 per ounce.
