*

Trump took the oath of office at 12:01 p.m. ET

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U.S. markets closed for Martin Luther King Jr. Day holiday

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Gold hit over a month high last week

(Updates with afternoon-session trading)

By Daksh Grover

Jan 20 (Reuters) -

Gold prices edged higher on Monday, bolstered by a weaker

U.S. dollar, as markets assessed the potential economic impact

of

U.S. President Donald Trump

's second-term policies following his inauguration.

Spot gold added 0.3% to $2,709.09 per ounce as of

1:49 p.m. ET (1849 GMT) with trading volumes thin due to the

U.S. markets being closed for the Martin Luther King Jr. Day

holiday.

U.S. gold futures fell 0.7% at $2,730.20,

reducing the premium over the spot price, after a Trump

administration official said that President Trump would issue a

broad trade memo on his

first day

in office that stops short of imposing

new tariffs

.

The

price spread

between New York futures and spot prices was inflated in

recent weeks as traders priced in possible U.S. import tariffs

and boosted deliveries into the CME stocks.

"I believe Donald Trump (presidency) will result in higher

market volatility, while some of his policies might keep

inflation higher for longer. This should continue to support

safe-haven assets like gold," UBS analyst Giovanni Staunovo

said.

Gold is used as a hedge against inflation, although Trump's

inflationary tariff policies could prompt the Federal Reserve to

keep rates higher for longer, diminishing the non-yielding

bullion's appeal.

Trump has talked of tariffs of as much as 10% on global

imports as well as 60% on Chinese goods and a 25% import

surcharge on Canadian and Mexican products.

"Gold's status as a financial asset makes it likely exempt

from broad-based tariffs, and we therefore assign a 10%

probability to a 10% effective tariff on gold being introduced

within the next 12 months," Goldman Sachs said.

Bullion hit its highest since Dec. 12, 2024, last week after

cooler core inflation data, Fed Governor Waller's dovish remarks

and reports of gradual tariff introductions led traders to price

in two rate cuts this year from just one earlier.

The dollar index dropped 0.9%, making gold more

attractive to foreign buyers.

Spot silver rose 0.7% to $30.52 per ounce,

palladium shed 0.8% to $940.29 and platinum

declined 0.2% to $940.70.