Gold maintained its upward momentum as investors sought safe-haven assets amid uncertainty over President Donald Trump’s shifting tariff plans and concerns about a potential U.S. recession.
The precious metal was trading close to $2,915 an ounce, as markets reacted to Trump’s mixed messages on trade. Investors were weighing his decision to reduce the threat of escalating tariffs on Canadian steel and aluminum just hours after announcing he would double duties to 50%. The President also attempted to calm recession fears, despite market volatility and a weaker U.S. dollar, which made gold cheaper for foreign buyers.
U.S. Economic Reports Spark Concerns Over Stagflation
A series of lackluster U.S. economic reports have raised fears of stagflation — a scenario where inflation rises alongside stagnant economic growth. A slowdown in trade-induced growth could prompt the Federal Reserve to cut interest rates several times throughout the year.
Gold traders are also waiting for the release of the U.S. inflation data, which is expected later Wednesday. Economists predict consumer prices may have risen in February, which could complicate the Fed’s potential rate-cutting plans. Typically, lower interest rates benefit non-interest-bearing assets like gold, as they make the metal more attractive to investors.
Geopolitical Risks and Potential Easing
Meanwhile, markets are also keeping an eye on global geopolitical risks that could affect safe-haven demand for gold. Ukraine has accepted a U.S. proposal for a 30-day truce with Russia. This agreement is part of a deal to lift the freeze on military and intelligence aid to Ukraine, following discussions with the Trump administration.
Gold Prices and Market Movement
Spot gold remained relatively unchanged at $2,914.32 an ounce as of 8:04 a.m. in Singapore, after rising nearly 1% on Tuesday. The Bloomberg Dollar Spot Index gained 0.1% following a 0.4% loss in the previous session. Meanwhile, silver declined, platinum saw a slight increase, and palladium remained steady.
In conclusion, gold continues to see strong demand as traders navigate the uncertainty surrounding Trump’s trade policies, U.S. economic data, and geopolitical risks. The upcoming inflation report will be crucial for determining the Federal Reserve’s next steps and could influence gold’s performance in the short term.
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