As safe-haven demand was fuelled by ongoing tariff uncertainties, gold prices increased on Thursday. Additionally, a lower-than-expected U.S. inflation report bolstered prospects of rate reduction, which in turn helped bullion.
As of 0522 GMT, U.S. gold futures GOLD firmed 0.2% to $2,951.90, while spot gold GOLD was up 0.4% at $2,943.03 an ounce.
“I think $3,000 is the next logical target, likely to be reached sometime over the next several months,” Edward Meir, an analyst at Marex, stated.
“The CPI data was encouraging but I suspect that the tariff increase has yet to be picked up in the inflation data.”
Although the U.S. consumer price index climbed less than anticipated last month, the improvement is probably just temporary given the severe import tariffs that are predicted to drive up the price of the majority of items in the coming months.
In an environment where interest rates are low, non-yielding gold prospers, and lower inflation gives the US Federal Reserve greater leeway to lower interest rates.
Trump started a trade war early this month by raising the tariffs on Chinese goods to 20% and levying a new 25% penalty on imports from Canada and Mexico.
Later, he retracted his statement and granted a one-month exception for any commodities that comply with the U.S.-Mexico-Canada Trade Agreement’s rules of origin.
Additionally, only hours after announcing the new duties, Trump changed his mind on Tuesday afternoon about his promise to boost taxes on Canadian steel and aluminium to 50%.
It is generally anticipated that Trump’s tariffs will increase inflation and economic instability, which is why safe-haven gold hit a record high of $2,956.15 on February 24.
Investors are now waiting for more information about the Fed’s monetary policy from the U.S. Producer Price Index (PPI) data that is expected later in the day.
Platinum PL1! dropped 0.5% to $979.09, palladium XPDUSD1! increased 0.6% to $954.05. Spot silver XAGUSD1! down 0.5% to $33.05 an ounce.