Trump’s tariffs may fuel inflation, pushing safe-haven gold to a record high of $2,956.15
Gold prices rose on Thursday as uncertainty surrounding tariffs continued, prompting increased safe-haven demand. Additionally, a cooler-than-expected U.S. inflation report bolstered expectations for rate cuts, further supporting bullion. Gold rates in the UAE rose today. The price of 24-carat gold increased by AED3, settling at AED 354.25. Likewise, 22-carat gold saw a rise of AED3, reaching AED330.25. The price of 21-carat gold went up by AED2.75 to AED316.5, while 18-carat gold also increased by AED2.25, now priced at AED 271.25.
Spot gold experienced a 0.4 percent increase, reaching $2,943.03 per ounce as of 0522 GMT, while U.S. gold futures rose by 0.2 percent to $2,951.90.
Data indicates lower inflation
Data revealed that the U.S. consumer price index increased less than anticipated last month. However, this improvement may be temporary, considering the aggressive tariffs imposed on imports, which are expected to elevate the cost of most goods in the upcoming months.
Lower inflation creates more space for the U.S. Federal Reserve to implement interest rate cuts, benefiting non-yielding gold, which thrives in a low-interest-rate environment.
Tariffs escalate trade tensions
Earlier this month, Trump initiated a trade war by raising tariffs on goods from China to 20 percent, along with imposing a new 25 percent duty on imports from Canada and Mexico. Subsequently, he provided a one-month exemption for any goods that adhere to the rules of origin stipulated in the U.S.-Mexico-Canada Agreement on trade.
On Tuesday afternoon, Trump also reversed his commitment to double tariffs on steel and aluminum from Canada to 50 percent, just hours after announcing the increased tariffs.
Trump’s tariffs are widely anticipated to ignite inflation and economic uncertainty, leading safe-haven gold to achieve a record high of $2,956.15. Investors are now looking forward to the U.S. Producer Price Index (PPI) data set to be released later in the day, which will offer further insights into the Fed’s monetary policy.
Read more: UAE gold prices fall AED1.75, global rates see uptick as dollar weakens, safe-haven demand rises
Treasury yields climb amid trade war fears
Meanwhile, U.S. Treasury yields have risen amid concerns that the global trade war could propel prices higher. As a result, the U.S. Dollar Index (DXY), which tracks the value of the Greenback against six currencies, increased by 0.14 percent to 103.55.
On Wednesday, the 25 percent U.S. tariffs on steel and aluminum were enforced at midnight, as President Donald Trump continues his efforts to reduce the trade deficit through import duties.
Read more: UAE gold prices up AED0.5, global rates steady ahead of inflation data
Gold maintains upward momentum
The non-yielding metal appears poised to extend its rally, despite some progress on a truce between Ukraine and Russia. The World Gold Council (WGC) has reported that central banks have persisted in their gold purchases. The People’s Bank of China (PBoC) and the National Bank of Poland (NBP) added 10 and 29 tonnes, respectively, in the first two months of 2025.
Given the current circumstances, gold is on track to test the $2,950 mark. Traders will be focused on the upcoming release of the U.S. Producer Price Index (PPI) for February, Initial Jobless Claims, and the University of Michigan (UoM) Consumer Sentiment.
In related market activity, spot silver declined by 0.5 percent to $33.05 an ounce, platinum dropped 0.5 percent to $979.09, while palladium rose by 0.6 percent to $954.05.
