Gold prices edged higher on Thursday, as markets closely tracked developments in U.S. President Donald Trump’s tariff plans, which could ignite a global trade war, while investors awaited crucial U.S. data due later in the day.
Spot gold was up 0.2% at $2,908.50 per ounce, as of 0240 GMT. Bullion hit a record peak of $2,942.70 on Tuesday. U.S. gold futures firmed 0.3% to $2,936.50.
Trump said that he would impose reciprocal tariffs as soon as Wednesday evening on every country that charges duties on U.S. imports, in a move that ratchets up fears of a widening global trade war and threatens to accelerate U.S. inflation.
“Gold continues to serve as a key diversifier amid trade uncertainties, as market participants seek to mitigate portfolio volatility,” IG market strategist Yeap Jun Rong said.
The U.S. consumer price index increased more than expected in January, reinforcing the Federal Reserve’s message that it was in no rush to resume cutting interest rates amid growing uncertainty over the economy.
Chair Jerome Powell told the House Financial Services Committee that Fed’s battle with rising prices wasn’t finished, and meant any further rate cuts would have to wait until it is clear inflation will return to the Fed’s 2% target.
Investors’ attention will now shift to the Producer Price Index (PPI) data, scheduled at 1330 GMT, for further insights on monetary policy.
“Markets (are) largely shrugging off the hotter-than-expected CPI print, the upcoming PPI data may have a more muted impact on sentiment, given that rate expectations have already adjusted to a prolonged high-for-longer rate environment,” Yeap said.
Gold drops after hot US inflation data
Bullion is considered a hedge against inflation, but higher interest rates dampen the non-yielding asset’s appeal.
On the geopolitical front, Trump ordered top U.S. officials to begin talks on ending the war in Ukraine.
Spot silver rose 0.2% to $32.29 per ounce, platinum gained 0.2% to $994.75 and palladium firmed 0.5% to $978.46.
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