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Gold price (XAU/USD) extends its upside to around $5,050 during the early Asian session on Tuesday. The precious metal gains momentum amid growing concerns about financial and geopolitical uncertainty. The US ADP Employment Change and Consumer Confidence reports will be published later on Tuesday.

Traders rushed to the safe-haven asset as concern spread that US President Donald Trump is upending relations with key allies, from Europe to Canada. Trump on Saturday threatened to slap 100% tariffs on Canadian goods if the country strikes a trade deal with China, raising fears of a renewed trade war. 

Furthermore, concerns over the Federal Reserve (Fed) independence might contribute to the yellow metal’s upside. Traders await Trump’s pick for the next Fed Chair after Trump said he has finished interviewing candidates. A more dovish chair would increase bets on further interest-rate cuts this year, which could lift the Gold price. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.

The Fed interest rate decision will take center stage on Wednesday. The US central bank is widely expected to hold its benchmark rate steady at the 3.50% to 3.75% target range. Traders will closely monitor Fed Chair Jerome Powell’s remarks following the policy meeting, as his insights could provide important clues for the months ahead. Nonetheless, if Powell delivers hawkish comments, this could provide some support to the US dollar (USD) and weigh on the USD-denominated commodity price in the near term. 

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