GOLD prices climbed to a fresh 11-week high on Wednesday (Jan 22), buoyed by a weaker US dollar and as uncertainty surrounding President Donald Trump’s trade policies boosted safe-haven demand.

Spot gold was up 0.1 per cent at US$2,748.58 per ounce, as at 0105 GMT, after hitting its highest since Nov 5 earlier in the session. US gold futures added 0.1 per cent to US$2,763.40.

Trump held back from imposing trade barriers on his first day in office on Monday, pushing the US dollar lower.

A weaker US dollar makes gold more attractive for foreign buyers. Gold is considered a safe investment during economic and geopolitical uncertainty.

Trump vowed to hit the European Union with tariffs and said his administration was discussing imposing a 10 per cent tariff on goods imported from China on Feb 1.

Gold’s appeal as an inflation hedge may be diminished if Trump’s policies, which are seen as inflationary, lead the Federal Reserve to maintain interest rates higher for longer.

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After two years of progress on inflation and surprisingly persistent economic growth, the Fed next week meets with one eye on new Trump administration policies and another on a bond market that has ratcheted up borrowing costs even as US central bankers have been cutting interest rates.

The Fed is expected to hold its benchmark interest rate steady in the current 4.25 to 4.5 per cent range at its next policy meeting on Jan 28 to 29, after reducing it by a full percentage point since September.

Higher interest rates dampen the appeal of non-yielding gold.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings fell 0.85 per cent to 871.66 tonnes on Tuesday from 879.12 tonnes on Friday.

Spot silver was flat at US$30.85 per ounce, palladium gained 0.1 per cent to US$958.11 and platinum steadied at 944.05. REUTERS