Gold Rises Amid Uncertainty Over Tariffs and Inflation Data Boosting Demand
Gold continues to rise in global markets amid ongoing uncertainty regarding trade tariffs and economic policies. Lower-than-expected U.S. inflation data has reinforced expectations of interest rate cuts, further boosting demand for the precious metal as a safe-haven asset. This surge in gold prices comes at a time of escalating trade tensions, fueled by recent tariff decisions made by U.S. President Donald Trump, impacting financial markets and key commodities.
Gold Price Movements
gold rose 0.2% to $2,938.24 per ounce, while U.S. gold futures remained steady at $2,945.70 per ounce, according to Reuters data.
Impact of Inflation Data and Monetary Policy
Recent economic reports show that the U.S. Consumer Price Index (CPI) increased at a slower pace than expected last month. However, this improvement is likely temporary, as newly imposed tariffs on imports are expected to push up the prices of most goods in the coming months.
Slowing inflation provides greater room for the U.S. Federal Reserve to lower interest rates, which supports gold prices. Since gold does not yield interest, it becomes more attractive to investors when interest rates decline, as they seek safer assets amid economic instability.
Trade Tensions and Their Market Impact
Recent U.S. trade policies have heightened uncertainty in global markets, leading to increased demand for gold. Earlier this month, President Donald Trump imposed a 20% tariff on Chinese goods, along with a 25% tariff on imports from Canada and Mexico.
However, Trump later softened some of these measures, granting a one-month exemption for certain imports from Canada and Mexico under the United States-Mexico-Canada Agreement (USMCA). On Tuesday afternoon, he also reversed his decision to double tariffs on Canadian steel and aluminum to 50%, just hours after announcing the increase, causing market fluctuations.
Record Highs and Investor Expectations
Amid these trade tensions, gold prices hit a record high of $2,956.15 per ounce on February 24. Gold is widely considered a hedge against inflation and political risks, making it an increasingly attractive investment during times of economic uncertainty.
Investors are now eagerly awaiting the release of U.S. Producer Price Index (PPI) data later today, which could provide further insights into the Federal Reserve’s monetary policy direction and its impact on gold and other precious metals.
Performance of Other Precious Metals
Alongside gold’s gains, other precious metals also recorded slight increases:
Silver rose 0.2% to $33.29 per ounce. Platinum gained 0.2% to $985.18 per ounce. Palladium climbed 0.6% to $954.63 per ounce.
Gold continues to gain momentum amid growing expectations of interest rate cuts and ongoing trade uncertainties. With markets closely monitoring upcoming economic data releases, the precious metal remains a key investment choice for those seeking protection against inflation and economic volatility.
