Amid worries about escalating trade tensions and slower economic growth in the wake of U.S. President Donald Trump’s tariffs, gold stayed steady on Tuesday as investors anticipated a crucial inflation print this week to gauge the Federal Reserve’s interest rate path.
ESSENTIALS
- U.S. gold futures GOLD dropped 0.3% to $2,891.70 as of 00:31 GMT, while spot gold GOLD hardly moved at $2,887.61 an ounce.
- In an interview with Fox News, Trump discussed a “period of transition” but refrained from speculating on whether his tariffs on Canada, Mexico, and China will cause a recession in the United States.
- Monday saw a worldwide stock market meltdown as investor concerns about a possible economic downturn intensified following Trump’s failure to rule out a recession.
- In addition to increased charges on Chinese goods, Trump last Tuesday placed new 25% tariffs on imports from Canada and Mexico.
- He later lifted the duties on a large number of goods from Canada and Mexico for a month, which stoked market jitters and increased concerns about inflation and growth in the United States.
- It is generally believed that Trump’s tariffs would increase inflation and economic instability.
- On February 24, safety-haven gold hit a record high of $2,956.15 due to concerns over Trump’s tariff intentions.
- Gold is viewed as an inflation and political risk hedge.
- Investors are now anticipating the release of U.S. Producer Price Index (PPI) data on Thursday and Consumer Price Index (CPI) data on Wednesday in order to assess the Fed’s potential future interest rate stance.
- Due to its non-yielding nature, gold may lose its appeal if the Fed is forced to maintain higher interest rates due to mounting price pressures.
- Spot silver XAGUSD1! dropped 0.4% to $31.98 an ounce, palladium XPDUSD1! fell 1.1% to $932.57, while platinum PL1! dropped 0.4% to $954.15.
On Tuesday, March 11, no significant information or events are anticipated.