LONDON: Gold prices traded near record high levels on Thursday, fuelled by demand for safe-haven assets amid tariff concerns and a US inflation report that reinforced expectations of a future rate cut. Spot gold gained 0.5% to $2,946.68 an ounce, as of 1131 GMT. Bullion hit a record high of $2,956.15 on February 24 due to uncertainty caused by US tariffs.
US gold futures were up 0.3% at $2,956.
“Gold continues to be supported by the prospect of a tariff-driven economic slowdown, potentially bringing forward US Fed rate cut expectations,” Ole Hansen, head of commodity strategy at Saxo Bank, said. “I maintain my bullish stance on gold, expecting an economic slowdown or even stagflation to drive demand and price of gold higher.”
US President Donald Trump’s fluctuating trade policies - imposing and delaying tariffs on Canada and Mexico, while raising duties on Chinese goods - have roiled the global financial markets. In response, China and Canada hit back with tariffs of their own. Data on Wednesday showed consumer prices cooling more than analysts’ expectations, indicating that the Fed could cut its interest rate this year.
The Fed last year cut rates by 100 basis points, but has held steady since then. Investors prefer non-yielding gold in a low interest rate environment. Investors now await the US Producer Price Index (PPI) data due at 1230 GMT for further insights into the Fed’s monetary policy. “A softer than expected PPI report may feed Fed cut bets, fuelling gold’s upside gains. However, a hotter-than-expected report could cap gains, inviting bears to challenge support at $2,930,” said Lukman Otunuga, senior research analyst at FXTM. Spot silver was flat at $33.21 an ounce, platinum lost about 1% to $974.45, while palladium dropped 0.2% to $947.17.
“We have upgraded our annual silver price forecasts by 2-4%, on account of the metal’s precious characteristics, despite downgrading our industrial supply-demand balance,” Macquarie said in a note.
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