(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.
Bullion traded above $2,890 an ounce on Monday, while a gauge of the dollar’s strength against a basket of currencies fell. Trump is on the verge of slapping new tariffs on Canada and Mexico while doubling a levy on China.
The latest data on US factory activity adds to growing concern that Trump’s moves will undermine the economy that’s already showing signs of cooling — a scenario which underscores the precious metal’s haven status.
US manufacturing activity last month edged closer to stagnation as orders and employment contracted, while a gauge of prices paid for materials surged to the highest since June 2022 as tariff concerns mounted, according to data released Monday.
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.
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 1.2% to $2,891.63 an ounce at 12:02 p.m. in New York, after ending last week 2.7% lower. The Bloomberg Dollar Spot Index eased 0.6%. Silver, palladium and platinum all gained.
--With assistance from Preeti Soni and Sybilla Gross.