On Monday (February 3), in the morning session of the Asian market, spot gold fluctuated and weakened, falling to around $2785 at one point and currently trading at around $2793.18 per ounce, a decline of about 0.45%. Due to US President Trump's order on Saturday (February 1) to impose a 25% tariff on imported goods from Canada and Mexico starting from Tuesday (February 4), and a 10% tariff on goods from China, the US dollar index surged nearly 1% to a nearly three week high of 109.62, suppressing gold prices.

US officials have told the media that energy products from Canada will only be subject to a 10% tariff, while energy imports from Mexico will be subject to a 25% tariff.

A White House briefing on tariffs stated that the tariffs will remain in place "until the crisis eases," but did not elaborate on what actions the three countries need to take to win probation.

These tariff measures follow up on multiple threats made by Trump shortly after winning the presidential election last year, which could trigger retaliation and potentially lead to a trade war, causing widespread economic chaos for all relevant countries. These three countries are the largest trading partners of the United States, which has raised concerns that tariffs will lead to price increases.

Last Friday's data showed that the price increase in December in the United States reached its highest level in eight months, with strong consumer spending on goods and services, indicating that the Federal Reserve may not be in a hurry to resume interest rate cuts soon.

Although the report from the US Department of Commerce last Friday showed only a slight increase in prices compared to the previous month, excluding the volatile food and energy sectors, the year-on-year growth rate of this so-called core inflation rate has not slowed down since October. The progress in reducing inflation stagnated in the fourth quarter.

The Federal Reserve kept interest rates unchanged last Wednesday, marking the first time since the loose policy cycle began in September. The policy statement released together with the decision abandons the claim of "progress" in achieving the Federal Reserve's 2% target on inflation rate. The uncertainty of the economic impact of President Trump's fiscal, trade, and immigration policies has cast a shadow over the inflation outlook.

The Federal Reserve's forecast is that the pace of monetary easing policy will slow down in the future, as the economy performs well and inflation rates may only slowly return to target in a highly uncertain environment, "said Carl Weinberg, Chief Economist at High Frequency Economics." These data support this strategy

The Bureau of Economic Analysis of the US Department of Commerce stated that the Personal Consumption Expenditures (PCE) price index rose by 0.3% in December, the largest increase since April last year, compared to a 0.1% increase in November without correction.

The increase is in line with economists' expectations. The commodity prices rose by 0.2%, the first increase in five months, due to the rising costs of motor vehicles and components, as well as gasoline and other energy products, whose prices increased by 4.2%.

In December, the PCE price index in the United States increased by 2.6% year-on-year. This is the largest increase in seven months, following a 2.4% increase in November.

Excluding the volatile food and energy sectors, the PCE price index rose by 0.2% last month after confirming a 0.1% increase in November. This core inflation rate has increased by 2.8% year-on-year, rising by the same amount for three consecutive months.

Some economists emphasize that the core inflation rate has only slightly increased compared to the previous quarter, and another report from the Bureau of Statistics of the Ministry of Labor shows that labor costs only slightly increased in the fourth quarter, indicating that the downward trend of inflation is still intact. The core inflation rate for the fourth quarter increased by 2.2% on an annual basis.

Federal Reserve Chairman Powell stated last week that policymakers are monitoring the 12-month inflation rate "because it eliminates any potential seasonal issues.

Consumer spending accounts for over two-thirds of US economic activity, and after being revised up to 0.6% in November, it increased by 0.7% in December. Previous reports showed that expenditures increased by 0.4% in November.

After adjusting for inflation, consumer spending increased by 0.4%, putting the economy on a higher growth track as it entered the first quarter.

After a 0.3% increase in November, personal income in the United States increased by 0.4%. Due to spending growth exceeding income growth, the savings rate dropped from 4.1% in November to 3.8%, hitting a two-year low.

The very strong personal income and expenditure data continue to indicate that consumers remain resilient. At the same time, inflationary pressures are also continuing to weaken, "Goldberg said. This indeed highlights that if such data continues, the Federal Reserve can at least remain inactive around the next meeting

Chicago Fed President Goolsby said that the latest inflation data was slightly better than expected, giving him confidence that inflation is on its way to the 2% target. However, he still expects the Fed's policy rate to "significantly decrease" within 12 to 18 months.

Federal Reserve Governor Bauman stated last Friday (January 31) that she still expects a decrease in inflation rates to allow for further interest rate cuts this year, but she believes that wage increases, active financial markets, geopolitical risks, and upcoming government policies may slow down this process and keep price pressures high.

After US President Trump threatened tariffs, hardware prices hit a record high of $2817 per ounce last week. However, concerns about inflation dampened expectations of a Fed rate cut this year. The US dollar index rose 0.35% on Friday, causing gold prices to give up most of their gains in late trading and close at around $2800.53 per ounce. After Trump ordered the imposition of tariffs last Saturday, the US dollar gained more favor among safe haven funds, and expectations of a Fed interest rate cut further cooled. On Monday, the US dollar surged, further suppressing gold prices.

Bob Haberkorn, Senior Market Strategist at RJO Futures, said, "There is a lot of uncertainty now, and the market is also adopting a wait-and-see attitude towards tariff issues on the geopolitical stage

Marvin Loh, Senior Global Market Strategist at State Street, said last Friday, "To a large extent, tariffs and the government have driven this overly strong trend of the US dollar; one of the biggest challenges is that if you want to propose a theory that there is a Trump trade, then the strengthening of the US dollar has always been a self-sustaining trade

Loh pointed out last Friday that "US dollar trading is currently one of the most heavily positioned trades. It does need a catalyst to continue its upward trend. But the tariff threats and/or actions we will see over the weekend are the driving factors for this topic now“

There is a lot of uncertainty about tariffs and what the next steps will be in this regard, "said Gennadiy Goldberg, head of US interest rate strategy at TD Securities

Canadian provincial officials and business executives expressed anger over this and called for mandatory tariffs on US imports. A senior Mexican official stated that Mexico will respond with retaliatory tariffs.

According to Trump's written order, imported goods shipped or transported into the United States before 12:01 am on Saturday will be exempt from tariffs. Trump has declared a national emergency under the International Emergency Economic Powers Act and the National Emergencies Act to support the imposition of tariffs.

However, according to trade lawyers, these two bills have not been tested for their widespread imposition of tariffs. White House officials have stated that there will be no exceptions to tariffs, and if Canada, Mexico, or China retaliate against US exports, Trump is likely to increase US tariffs.

Ontario Premier Doug Ford posted on X social media, stating that Canada "now has no choice but to retaliate, and to do so fiercely. As Ontario Premier, I fully support the federal government's strong response to the US tariffs on a one-to-one basis

Canadian Prime Minister Justin Trudeau had previously threatened to take tough retaliatory measures if Trump imposed tariffs.

Mexican President Simbaum stated on social media on February 1st that she has instructed the Mexican Ministry of Economy to take both tariff and non-tariff measures in response to the US government's tariff measures to defend Mexican interests. She stated on Sunday that Mexican sovereignty is non-negotiable and will release more details about Plan B on Monday.

China also said that it would take "counter-measures", while Trump said that Americans might feel "some pain".

White House officials have stated that Canada will no longer enjoy the minimum tariff exemption from the United States for small goods worth less than $800. Officials have stated that Canada and Mexico have become pipelines for fentanyl and its precursor chemicals to be transported to the United States through small packages that are typically not inspected by customs officials.

The White House has not yet released all details of the tariff plan, raising questions about its impact and duration, while some analysts continue to consider the possibility of delaying or completely avoiding tariffs through negotiations.

Barclays strategists previously estimated that tariffs could have a 2.8% drag on the profits of S&P 500 companies, including the expected impact of retaliatory measures by target countries.

Goldman Sachs economists estimate that imposing comprehensive tariffs on Canada and Mexico would mean a 0.7 percentage point increase in core inflation and a 0.4% decrease in gross domestic product. The bank stated in its report on Sunday that it expects to update these estimates and predicts that these measures will not be permanent.

European Central Bank Managing Director Klaas Knot stated on Sunday (February 3) that he expects the new tariffs to lead to rising US inflation and interest rates, potentially weakening the euro.

Paul Ashworth, Chief North American Economist at Capital Economics, stated in a report that if tariffs lead to a surge in inflation, the likelihood of the Federal Reserve implementing rate cuts that are widely believed to promote economic growth will decrease. In this situation, the window for the Federal Reserve to resume interest rate cuts in the next 12-18 months will be tightly closed.

On Monday morning in the Asian market, most non US currencies fell sharply, and US stock index futures also fell across the board. The S&P 500 stock index futures fell by 2.06%, Nasdaq stock index futures fell by about 3%, and Dow Jones stock index futures fell by 1.31%; This is expected to provide safe haven support for gold prices. Investors need to pay attention to changes in market risk aversion and further interpretations of Trump's tariff policies.

In addition, this trading day will also create the January ISM Manufacturing PMI data for the United States. The 2027 FOMC vote committee and Atlanta Fed Chairman Bostic will give a speech on the economic outlook, which investors need to pay attention to.