Gold prices remained close to a record high on Tuesday, bolstered by safe-haven demand amid concerns over U.S. President Donald Trump’s tariff strategies. These tariffs could potentially spur inflation and intensify a global trade conflict.
Fundamentals
Spot gold experienced minimal movement, priced at $2,949.46 per ounce as of 0105 GMT, approximately $7 less than the peak of $2,956.15 reached during the previous session. U.S. gold futures remained stable at $2,965.
On Monday, Trump announced that tariffs on Canadian and Mexican imports are proceeding as planned, despite the countries’ efforts to enhance border security and control the influx of fentanyl into the U.S. before the March 4 deadline.
Both investors and economists are anticipating a "strong and systematic" response from the U.S. Federal Reserve to shifts in inflation and the labor market, as highlighted in research released by the San Francisco Fed on Monday. Traders are closely monitoring the Fed’s interest rate direction for insights, given that Trump’s policies are perceived as inflationary.
Gold is traditionally seen as a secure investment during uncertain times. However, if inflation increases and prompts the Fed to keep rates higher for an extended period, the attractiveness of gold as a non-yielding asset may decline.
Investors are expected to pay attention to Friday’s U.S. Personal Consumption Expenditures report, which is the Fed’s preferred measure of inflation.
On the geopolitical stage, stark differences were apparent between President Trump and French President Emmanuel Macron regarding their strategies in Ukraine, highlighting a rift between the United States and Europe over Trump’s push for a swift ceasefire agreement with Russia.
Meanwhile, India’s gold imports are projected to plummet by 85% in February compared to the previous year, reaching their lowest level in two decades, due to diminished demand amid record-high prices. India ranks as the world’s second largest consumer of gold.
In the silver market, spot prices decreased by 0.3% to $32.27 per ounce. Platinum also fell by 0.3% to $963.35, and palladium similarly dropped by 0.3% to $937.27.
Data/Events (GMT):
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0700 Germany GDP Detailed QQ SA, GDP Detailed YY NSA Q4
1500 U.S. Consumer Confidence February