Gold price sticks to intraday gains above $2,725, over two-month top amid trade war fears

• Gold price gains strong positive traction amid the flight to safety after Trump’s tariff remarks.
• Bets for more Fed rate cuts weigh on the US bond yields and further underpin the yellow metal. 
• A modest USD recovery, along with a positive risk tone, caps further gains for the commodity.

Gold price (XAU/USD) builds on the overnight bounce from the $2,689 area and gains some follow-through positive traction for the second straight day on Tuesday. US President Donald Trump’s tariff remarks boost demand for traditional safe-haven assets and lift the commodity to its highest level since November 6, around the $2,729 area. Apart from this, declining US Treasury bond yields, led by bets that the Federal Reserve (Fed) will cut interest rates twice this year, turns out to be another factor underpinning the lower-yielding yellow metal.

Meanwhile, expectations that Trump’s protectionist policies would reignite inflationary pressures and force the Fed to stick to its hawkish stance help the US Dollar (USD) to stage a modest bounce from a two-week low touched on Monday. This, along with a generally positive tone around the equity markets, contributes to keeping a lid on any further appreciation for the Gold price. Nevertheless, the fundamental backdrop seems tilted firmly in favor of bullish traders and suggests that the path of least resistance for the XAU/USD remains to the upside.