Investing.com–Gold prices fell in Asian trading on Monday, retreating from last week's sharp gains. This is because the US dollar strengthened after President Donald Trump's brief tariffs on Colombia.
Market sentiment is cautious ahead of the Federal Reserve's upcoming interest rate decision later this week.
It fell 0.7% to $2,752.09 an ounce before expiring in February and fell 0.8% to $2,783.22 by 01:21 ET (06:21 GMT).
The yellow metal gained nearly 3% last week on Trump's demand for rate cuts and expectations of gradual imposition of US tariffs.
“USD strength renewed this morning after the escalation between the US and Colombia is providing headwinds for gold in early morning trading,” Ing analysts said in a recent note.
Trump's tariff fears will boost dollar. Fed Meeting Loom
Trump imposed a 25% tariff on Colombian imports overnight after Colombian President Gustavo Petro blocked U.S. deportation flights.
Following Petro's proposal to use Colombia's presidential aircraft and take in the deportees, Trump has suspended tariffs and marked an interim resolution of diplomatic solidity.
It rose 0.3% in Asian trading on Monday after posting its worst weekly decline in two months.
A stronger dollar typically drives gold prices lower because the metal is more costly for buyers using other currencies.
Additionally, investors are cautious ahead of what is scheduled for later in the week.
The market expects the Fed will likely be stable at the end of its two-day meeting on Wednesday.
Gold tends to fall to higher interest rates as it becomes a less attractive investment compared to the assets that support the interest rates.
Other precious metals also fell due to the strong dollar. It slid 1.1% to $961.20 an ounce and fell 1.7% to $30.655 an ounce.
Copper will fall after 2 months
Copper prices retreated on Monday as the dollar recovered and uncertainty over Trump's tariff policy weighed on the red metal.
Copper hit a two-month high on Friday on Trump's soft tone on China tariffs.
The London Metal Exchange benchmark fell 0.5% to $9,230.50 a tonne and fell 1.1% to $4.275 a pound in February.
