Gold edges higher as traders fret about trade war

Bengaluru — Gold prices edged higher on Thursday, as markets closely tracked developments in US President Donald Trump’s tariff plans, which could ignite a global trade war, while investors awaited crucial US data due later in the day.

Spot gold was up 0.2% at $2,908.50/oz by 2.40am GMT. Bullion hit a record peak of $2,942.70 on Tuesday. US gold futures firmed 0.3% to $2,936.50.

Trump said that he would impose reciprocal tariffs as soon as Wednesday evening on every country that charged duties on US imports, in a move that ratcheted up the fear of a widening global trade war and threatens to accelerate US inflation.

“Gold continues to serve as a key diversifier amid trade uncertainties, as market participants seek to mitigate portfolio volatility,” IG market strategist Yeap Jun Rong said.

The US consumer price index (CPI) increased more than expected in January, reinforcing the Federal Reserve’s message that it was in no rush to resume cutting interest rates amid growing uncertainty over the economy.

Chair Jerome Powell told the House financial services committee that Fed’s battle with rising prices was not over, meaning further rate cuts would have to wait until it was clear inflation would return to the Fed’s 2% target.

Investors’ attention will now shift to the producer price index (PPI) data, scheduled at 1.30pm GMT, for further insights on monetary policy.

“Markets [are] largely shrugging off the hotter-than-expected CPI print, the upcoming PPI data may have a more muted impact on sentiment, given that rate expectations have already adjusted to a prolonged high-for-longer rate environment,” Yeap said.

Bullion is considered a hedge against inflation, but higher interest rates dampen the non-yielding asset’s appeal.

On the geopolitical front, Trump ordered top US officials to begin talks on ending the war in Ukraine.

Spot silver rose 0.2% to $32.29/oz, platinum gained 0.2% to $994.75 and palladium firmed 0.5% to $978.46.

Reuters