Gold prices rose on Thursday on growing concerns over U.S. President Donald Trump's impending tariff plans, which could further strain global trade relations.
At 9:41 am, spot gold was up 0.4% at $2,913.47 an ounce, nearing its all-time high of $2,942.70 reached on Tuesday. U.S. gold futures were up 0.4% at $2,941.50.
Trump plans to impose reciprocal tariffs on countries that charge duties on U.S. imports on Thursday. U.S. producer prices rose solidly in January , providing further evidence of rising inflation and reinforcing financial market expectations that the Federal Reserve will postpone any rate cuts until the second half of the year.
"The main factor is the political uncertainty and economic fallout...the PPI was fairly neutral and really didn't have much effect on gold, investors around the world are worried about what Trump's policies will do to the broader economy," said Jeffrey Christian, managing partner at CPM Group.
Despite expectations of a market sell-off due to recent CPI data, Powell's testimony and Trump's comments on a possible Russia-Ukraine peace, the market remains positive due to a flight to safety and traders buying on dips, contradicting these bearish signals, said Bob Haberkorn, senior market strategist at RJO Futures.
Federal Reserve Chairman Jerome Powell, in his second congressional hearing this week, reiterated that the central bank was in no hurry to cut interest rates. Consumer prices rose in January to their highest level in almost 18 months.
Gold bullion is seen as a hedge against inflation and economic uncertainties, but higher interest rates dampen the appeal of this non-yielding asset.
A stellar rally that has lifted global gold prices to record highs has overshadowed jewelry purchases for the wedding season in India, while dealers in China offered discounts to lure buyers. Spot silver fell 0.5% to $32.06 an ounce. Platinum was down 0.6% to $986.60 and palladium was flat at $974.45.
Anmol Choubey, Reuters