Gold rose to a new all-time high as concerns about the impact of tariffs on the global economy continued to push investors to seek safety in the precious metal, even after the easing of US inflation data.
US core inflation cooled significantly in March, indicating some relief for consumers ahead of widespread tariffs, which risk contributing to price pressures. US equities fell after the biggest purchases in years, while fixed income rebounded after the release. Traders discounted expectations of three interest rate cuts for the rest of the year, with the possibility of a fourth. Lower rates tend to benefit gold, as it does not pay interest.
Risks and uncertainty remained after US President Donald Trump's 90-day tariff pause on higher tariffs affecting dozens of trading partners. On Thursday, Trump's tariffs on Chinese imports stand at least 145%, including both a 125% rate covering “reciprocal” duties and levies imposed on China for retaliating against US import taxes, according to a White House memo.
The latest development fueled skepticism that trade talks will be concluded on time, despite White House Economic Council Director Kevin Hassett's assertion that the US is “very far along” in its talks with economic partners.
Financial markets have been gripped by the constant back-and-forth of the Trump administration's tariff plan, trying to find direction and certainty. That has been supporting bullion given its safe-haven status. Gold's 21% rally this year has also been driven by hopes of further easing by the Federal Reserve and purchases by central banks.
“We remain quite positive on gold,” Dominic Schnider, head of commodities and currencies for Asia-Pacific at UBS Global Wealth Management, said on Bloomberg Television. ”The next step is going to be, at some point, Fed intervention — and that gives the next leg up for gold.”