Gold prices rose on Thursday amid growing concerns over US President Donald Trump's impending tariff plans, which could further strain global trade relations.
At 9:41 a.m., spot gold rose 0.4% to $2,913.47 an ounce, approaching its all-time high of $2,942.70 reached on Tuesday. US gold futures rose 0.4% to $2,941.50.
Trump plans to impose reciprocal tariffs on countries that levy duties on US imports on Thursday. US 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 political uncertainty and the economic consequences... the PPI was fairly neutral and didn't really have much effect on gold. Investors around the world are concerned about what Trump's policies will do to the economy in general,” 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 peace between Russia and Ukraine, 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 nearly 18 months.
Gold bullion is considered a hedge against inflation and economic uncertainty, 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 India's wedding season, while dealers in China offered discounts to attract buyers. Spot silver fell 0.5% to $32.06 an ounce. Platinum fell 0.6% to $986.60, and palladium was steady at $974.45.
Anmol Choubey, Reuters