Why are gold prices rising? Find out the reason for the surge

Gold inched up on Thursday, helped by a pullback in the US dollar, while investors awaited US non-farm payrolls data due later this week to assess the Federal Reserve’s interest rate trajectory as global trade tensions escalated.

Spot gold firmed 0.1 per cent to $2,922.86 an ounce as of 0320 GMT, while US gold futures added 0.2 per cent to $2,931.60.

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The dollar index wallowed near a four-month trough as the US exempted automakers from the 25 per cent tariffs on Canada and Mexico for a month as long as they complied with existing free trade rules.

US President Donald Trump is also open to hearing about other products that should be exempted from the tariffs, the White House added.

“A (possible) delay in the tariff war by the US has pushed the dollar lower and, because of that, gold is supported,” Reliance Securities’ senior analyst Jigar Trivedi said.

“The broad undertone is really positive in gold.”

Trump’s tariffs have strained relations with Canada, Mexico, and China. While Canada and China have responded with tariffs of their own on select U.S. imports, Mexico has vowed to retaliate.

Worries over Trump’s tariff policies pushed safe-haven gold to a record high of $2,956.15 on February 24 and helped it gain more than 11 per cent year-to-date.

Gold is considered a hedge against political uncertainties and inflation.

“The $3,000 psychological level for gold appears increasingly within reach as prices resume their upward trajectory following a brief retracement,” said IG market strategist Yeap Jun Rong.

The market now awaits the non-farm payrolls report, which is expected to show a gain of 160,000 jobs for February, economists surveyed by Reuters said.