Safe-haven gold firms on weaker dollar, growth concerns

Gold prices gained 1% on Tuesday amid a weaker dollar and economic slowdown worries due to tariff wars, while investors strapped in for inflation data that could shed light on the future path of US interest rates.

Spot gold was 1% firmer at USD 2,917.79 an ounce as of 01:16 p.m. ET (1716 GMT). US gold futures settled 0.7% higher at USD 2,920.90.

The US dollar index hit its lowest level since mid-October. A softer dollar makes greenback-priced bullion more affordable for other currency holders.

“Gold is likely to remain supported amid ongoing market uncertainties, bolstering demand for the safe-haven asset. However, any positive developments in Russia-Ukraine negotiations could reduce risk premiums,” said Zain Vawda, market analyst at MarketPulse by OANDA.

The tariff policies implemented by US President Donald Trump against key trading partners have caused significant volatility in global markets and heightened concerns about economic growth.

Bullion is considered a hedge against uncertainties and tends to thrive in a low-interest environment since it is a non-yielding asset.

Market attention will be on Wednesday’s US Consumer Price Index and Thursday’s Producer Price Index. According to a Reuters poll, February’s CPI is expected to have climbed 0.3%.

Traders are currently expecting the Federal Reserve to cut interest rates in June.

“The gold price is already trading at a very high level due to the sharp rise since the start of the year, which limits the upside potential,” Commerzbank said in a note.

Spot silver added 2% to USD 32.77 per ounce. Platinum was up 1.9% at USD 976.0 and palladium lost 0.1% to USD 941.84.

(Reporting by Ashitha Shivaprasad and Sarah Qureshi in Bengaluru, additional reporting by Ishaan Arora; editing by Ed Osmond, Christina Fincher, and Vijay Kishore)

US yields edge higher as risk aversion eases

US Treasury yields drifted higher on Tuesday, rebounding after the yield on two-year notes hit five-month lows earlier, as risk-off sentiment eased in global markets a day after a Wall Street selloff.

The two-year Treasury yield was little changed at 3.891%, after hitting 3.83% during Asian hours, its weakest level since October 4.

The benchmark 10-year yields were up 3.2 bps at 4.244%, holding above a near 4-1/2-month low hit last week.

On Monday, two-year yields fell around 10 basis points in their biggest daily drop since September after US President Donald Trump declined to rule out a recession as a result of his tariff policies.

Wall Street stocks were lower on Tuesday, but declines were smaller compared with Monday’s sellfoff in a sign that sentiment was somewhat recovering.

“It’s challenging to decipher Trump’s policy and its impact on the Treasury market,” said Massimiliano Maxia, senior fixed income specialist at Allianz Global Investors.

Maxia is neutral on Treasuries, but said his view could change “if we have strong evidence of a significant weakening of the US economy. We have just seen some alarm bells as of now.”

But in one worrying sign for the bond market, a measure of default risk was creeping higher.

US short-dated credit default swaps, instruments used to hedge credit exposure, rose on Tuesday to their highest levels since the US election on November 5, reflecting creeping anxiety about the US debt ceiling.

One-year credit default swaps now trade at 45 basis points, according to S&P Global, up from 43 bps on Monday. The five-year CDS traded on Wednesday at 41 bps, also the highest since November 5.

Junk corporate bond spreads widened to more than 300 bps on Tuesday, their most since September, a sign that investor confidence is deteriorating as worries about a recession and global trade war rise.

US Treasury yields, however, were little moved after the release of economic data that met expectations. The latest job opening figures for January showed 7.7 million vacancies. The NFIB Small Business Optimism Index fell by 2.1 basis points in February to 100.7.

“Optimism is fading a little bit, but it’s still far from certain that we’re going to see negative economic growth,” said Guy LeBas, chief fixed income strategist at Janney Capital Management. “It’s hard to draw a line through any one data point,” he added.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 34.3 basis points, just below its level at Monday’s close.

“The distribution of possible outcomes has increased with the tariffs, and you could see a possible slowdown from job loss,” said Mike Sanders, portfolio manager and head of fixed income at Madison Investments.

“I think in general you’re going to have (Treasury) spreads just trade a little directionally with where equities are going to trade, but it’s going to be a bumpy couple of months until you see a conclusion of what’s getting implemented.”

On Tuesday, the US Treasury auctioned USD 58 billion in three-year Treasury notes. The offering received over USD 156 billion in competitive bids and came with a high yield of 3.908%, slightly higher than the 3.902% expected rate forecast.

(Reporting by Matt Tracy in Washington; editing by Christina Fincher, Rod Nickel, and Leslie Adler)

Oil settles slightly up on weaker dollar, US economic fears cap gains

NEW YORK – Oil prices settled slightly higher on Tuesday, helped by weakness in the dollar, but gains were capped by mounting fears of a US economic slowdown and the impact of tariffs on global economic growth.

Brent crude futures settled 28 cents, or 0.4%, higher at USD 69.56 a barrel after falling as low as USD 68.63 in early trade. US West Texas Intermediate crude futures gained 22 cents, or 0.3%, to USD 66.25 a barrel after previous declines as well.

The dollar index hit a four-month low, making oil less expensive for overseas buyers.

But US stock prices, which also influence the oil market, fell again, adding to the biggest selloff in months. Both crude benchmarks fell 1.5% on Monday, when the S&P 500 posted its biggest daily drop since December 18 and the Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.

Oil prices pared gains after US President Donald Trump said on Tuesday he had instructed his commerce secretary to add an additional 25% tariff on all steel and aluminum imports from Canada, bringing the total tariff on those products to 50%.

“That kind of drama is adding to the volatility here,” said Phil Flynn, senior analyst with the Price Futures Group.

Trump’s protectionist policies have shaken global markets. He has imposed, then delayed tariffs on major oil suppliers Canada and Mexico, while also raising duties on China, prompting retaliatory measures.

Over the weekend, Trump said a “period of transition” was likely and declined to rule out a US recession.

In supply, US crude oil production is poised to set a larger record this year than prior estimates, at an average 13.61 million bpd, the US Energy Information Administration said on Tuesday.

Investors are waiting for US inflation data due on Wednesday for clues on the path of interest rates. They also are closely monitoring OPEC+ plans. The producer group has announced plans to increase output in April.

A scaling back of US tariffs would ease fears of inflation and economic contraction, said PVM analyst Tamas Varga, but the recent oil price plunge meant it was “hard to see OPEC+ going ahead with its plan and releasing oil back to the market from April.”

On Friday, Russia’s Deputy Prime Minister Alexander Novak told reporters that OPEC+ would go ahead with its April increase but may then consider other steps, including reducing production.

Brent is finding strong technical support at around USD 70 a barrel and may look to stage a bounce, said Suvro Sarkar, energy sector team lead at DBS Bank, adding the OPEC+ supply response would be flexible, depending on market conditions.

“If oil prices fall below the USD 70 per barrel mark for an extended period, output hikes may be paused in our opinion. OPEC+ will also keep a careful eye on Trump’s Iran and Venezuela policies,” he said.

In the US, crude oil stockpiles rose by 4.2 million barrels in the week ended March 7, market sources said, citing American Petroleum Institute figures on Tuesday.

The report comes ahead of US government data on crude stockpiles due on Wednesday.

(Reporting by Stephanie Kelly in New York, Arunima Kumar in Mumbai, Nicole Jao in New York, and Emily Chow in Singapore; Editing by Marguerita Choy, Kirsten Donovan, and David Gregorio)

Hedge funds sped up de-risking, and there likely is more to come

NEW YORK – Global hedge funds accelerated the unwinding of stock positions on Monday, and this trend is likely to continue, as portfolio managers seek to reduce risk amid a selloff in US stocks, according to Goldman Sachs.

“Through yesterday, our best guess is that we are currently in the middle innings of this (de-risking) episode,” said Goldman Sachs Vice President Vincent Lin, although he pointed out that determining a de-risking duration is difficult.

Portfolio managers usually try to minimize their losses by unwinding trades over an extended period amid a selloff. It’s a way to avoid flooding the market with mammoth blocks of stocks, a move that could help move stock prices further down.

The prolonged de-risking means it could take a while for stocks to recover.

The unwinding on Friday and Monday represented the largest two-day deleveraging in four years, with industrials leading the pack, Goldman Sachs said in a separate note, adding that the exit from industrials was at a record high.

The bank said that the de-risking had accelerated from Friday, a trend it had previously compared with some early COVID pandemic unwinding.

Hedge funds cut their equity exposure on Monday as a steep selloff drove the S&P 500 index to its biggest one-day drop since December 18 and the Nasdaq Composite Index plunged 4% on fears of a recession triggered by US President Donald Trump’s tariffs on imports.

Tariffs have spooked investors, with fears of an economic downturn sparking a selloff in equities that has wiped out roughly USD 4 trillion from the S&P 500’s peak last month.

Goldman Sachs said portfolio managers ditched both long and short bets on specific stocks on Monday.

Hedge funds’ risk-shedding strategy seems to be paying off. Fundamental long/short, systematic, and multi-strategy hedge funds posted positive returns on Tuesday, the bank said.

(Reporting by Carolina Mandl in New York; Editing by Richard Chang and Lisa Shumaker)

US retail investors wary of buying the dip as Trump anxiety deepens

US retail investors are growing increasingly uneasy about a plummet in the stock market, asking for more investment advice, questioning whether to buy the dip, and looking for safer havens, strategists and wealth advisors said.

Investor fears that Donald Trump’s tariffs will spark an economic downturn are driving a sell-off in equities, wiping out USD 4 trillion from the S&P 500’s peak last month, a stunning reversal for Wall Street that was once fired-up by president’s agenda.

That was feeding through to some individual investor behavior.

“We’re seeing less and less dip buying than we’ve seen in a while, which tells us people are stepping back a little bit,” said Joe Mazzola, head trading and derivatives strategist at Charles Schwab.

The firm began seeing creeping risk aversion among retail investment clients in mid-February, he said, as those with larger portfolios became net sellers.

Andrew Graham, managing partner of Jackson Square Capital, which manages money for affluent and high-net worth individuals and families, said he has been building up cash in his client accounts to the highest in about five years, when the pandemic emerged as a new threat to the economy.

Graham, who has discretion over managing his clients’ accounts, said cash is now “well over 10%” of most of his clients’ portfolios. He is still selling stocks and building cash for his clients.

Clients are now being sure to show up for scheduled quarterly portfolio reviews with Graham and his team, he said.

“Worried or nervous clients translate into a busier calendar for us than usual,” Graham said. What concerns him, however, is that many investors may still view the sell-off as a correction as opposed to a prolonged downturn.

Broadly, cash levels are high with assets at money market funds at a record according to data from Investment Company Institute. Cash levels marched steadily higher last week, setting a fresh record of USD 7.3 trillion, said Peter Crane of Crane Data, a firm that tracks market flows. That compares with about USD 7.17 trillion at the beginning of 2025, he said.

To be sure, not all retail investors are overly worried. According to data from Vanda Research, as of last week – the last period for which figures were available – retail investors remained net buyers of single stocks that have been market darlings, such as Palantir.

Even leveraged exchange-traded funds offering investors a multiple of any upside on underlying stocks or indexes have been popular, said Marco Iachini, senior vice president at Vanda.

ROTATION OR ROUT?

As wealth advisors steer clients away from the most overvalued corner of the market — the stocks that also have an outsize weight in the Standard & Poor’s 500 index — they are drawing comfort from signs that not all parts of the market participated in Monday’s rout to the same extent.

“It feels to me that there is a rotation underway,” said Schwab’s Mazzola, pointing to the fact that while investors are dumping technology and financial stocks, energy and utilities companies attracted new inflows. He also draws comfort from the advance/decline ratio.

Nate Garrison, chief investment officer of World Investment Advisors, said he had been reallocating client assets into value stocks since early this year.

These are lower-risk securities that offer stable if not spectacular growth, but also tend to trade at lower valuations than flashier, high-octane stocks like Nvidia.

He has also added to positions in emerging markets and international equities.

“Value is still up this year, even as growth stocks are taking it on the chin.”

That still does not mean Garrison is willing to urge his clients to buy the dip.

“This is getting rid of the froth,” Garrison said. “We’re urging caution when it comes to making any major allocation decisions. There are real risks in this market right now.”

(Reporting by Suzanne McGee; editing by Megan Davies and Sam Holmes)

Japan’s Nikkei falls 2% to track Wall Street’s sharp declines

TOKYO – Japan’s Nikkei share average fell 2% on Tuesday, tracking sharp overnight losses of Wall Street, with technology stocks leading the declines.

By 0012 GMT, the Nikkei was down 2% at 36,285.01, near its lowest level since September 18.

The broader Topix fell 1.86% to 2,649.64.

U.S. stocks plunged on Monday as relentless tariff wrangling and mounting anxieties from a possible federal government shutdown gave rise to fears that the U.S. economy could be careening into recession.

In Japan, chip-related stocks fell, with Advantest and Tokyo Electron slipping 2.86% and 2.82%, respectively. Technology investor SoftBank Group fell 4.19%.

Uniqlo-owner Fast Retailing lost 2.78%.

Air-conditioner maker Daikin Industries rose 1.56% to provide the biggest support to the Nikkei. Soy sauce maker Kikkoman edged up 0.3%.

(Reporting by Junko Fujita; Editing by Tom Hogue)

Dollar dithers as safety bid flows to the yen

SINGAPORE – The yen was investors’ safe harbor of choice on Tuesday and it traded near five-month highs as fears about a tariff-driven slowdown in US growth have rattled US stocks and the dollar.

The Nasdaq fell 4% overnight and the S&P 500 slid 2.7% as equities caught up with a big rally in US bonds, moving on the risk that US economic growth slows down.

The yen touched a five-month peak of 146.625 per dollar and was last trading at 146.85.

Other moves in the currency market were more muted, but the lack of flight to the dollar – which has been sinking in recent weeks – was noteworthy, according to analysts.

The overnight drop in the risk-sensitive Australian dollar was a modest 0.4% and it last bought USD 0.6272. Sterling was holding on above its 200-day moving average at USD 1.2875 and the euro was steady just above USD 1.08.

There were falls in the Canadian dollar and Mexican peso – the economies whose exports are to bear the brunt of US tariffs – but they were modest.

The Canadian dollar was last steady around C$1.44 per dollar and the peso was at 20.34 per dollar. China’s yuan was steady at 7.26 per dollar in early offshore trade on Tuesday.

“Historically, the dollar outperforms when we get a solid rise in volatility, but when the US economy and US equity market is the central point of concern, this is now limiting the attractiveness of the dollar,” said Chris Weston, head of research at broker Pepperstone in Melbourne.

The turmoil in equities seemed to be triggered by a Donald Trump Fox News interview, in which the president talked about a “period of transition” and declined to predict whether his tariffs on China, Canada, and Mexico would result in a US recession.

The dollar index, however, had already notched its largest weekly drop in more than two years last week as selling tracked a fall in US bond yields and the euro leaped on German plans to reform a brake on borrowing.

“The market is unsure whether fading US exceptionalism will continue to hurt the dollar or whether the dollar benefits from its safe-haven status,” said Bank of Singapore strategist Sim Moh Siong, noting any extension of selling in stock markets may lead safe-haven dollar buying to finally kick in.

The dollar index was mostly flat overnight as small rises against the Aussie and sterling were offset by losses on the yen and it settled at 103.89.

Germany’s Greens overnight vowed to block plans for a massive increase in state borrowing to revamp the military, but forwarded rival proposals in a bid for compromise, and the euro handed back none of its massive gains from last week.

US bonds, however, rallied, pushing down yields at a time when global yields are spiking. US/

In a week, the gap between 10-year US and German yields has shrunk 33 basis points and the gap between US and Japanese yields has shrunk 17 bps.

(Reporting by Tom Westbrook; Editing by Lincoln Feast.)

Yields decline on growth fears, stock market drop

NEW YORK – US Treasury yields fell on Monday with those on interest-rate-sensitive 2-year notes on track for their largest daily drop since September after US President Donald Trump declined to rule out a recession as a result of his tariff policies.

In an interview, Trump declined to predict whether the US could face a recession amid stock market concerns about his tariff actions on Mexico, Canada, and China, saying that “there is a period of transition.”

US Treasury Secretary Scott Bessent said on Friday that the US economy may slow as it moves away from public spending toward more private spending, calling it a “detox period” needed to reach a more sustainable equilibrium.

“If the occupant in the White House is himself not terribly optimistic about short-term growth expectations, why should the market be optimistic about it?” said Will Compernolle, macro strategist at FHN Financial.

“If they are willing to look through what they see as short-term pain, the detox, then there’s an even bigger risk that, after the detox, they don’t really have the capability to stop a downturn before it’s too late.”

Tumbling stocks also boosted demand for safe-haven US government debt.

The yield on benchmark US 10-year notes was last down 10.5 basis points on the day at 4.213%, the largest daily drop since February 13.

The 2-year note yield fell 7.8 basis points to 4.539%, the biggest decline since September 4.

The spread between 2-year and 10-year Treasury yields steepened by around 2 basis points to 32 basis points.

A disorderly implementation of Trump’s trade tariffs has increased uncertainty over when and how long levies may be in place, which has added to fears over how they may impact growth and inflation.

Trump on Thursday suspended tariffs of 25% he had imposed last week on most goods from Canada and Mexico. The exemptions for the two largest US trading partners expire on April 2.

Concerns over federal government cost-cutting and layoffs have also raised concerns that the measures will further hurt consumer confidence and dent growth.

“The magnitude remains to be seen, but in the short run, lower government spending means less spending in the economy,” Morgan Stanley economists led by Seth Carpenter said in a report on Monday. “Fewer jobs lead to less labor income. Suspension or elimination of payments by the government means less income for those recipients. We now see a fiscal drag this year.”

Federal Reserve Chair Jerome Powell said on Friday that the US central bank is in no rush to resume interest rate cuts, with inflation still “somewhat above” the Fed’s 2% target.

But traders are betting that the Fed could deliver the first of a set of rapid-fire reductions in borrowing costs in June if an economic downturn occurs.

February’s jobs report gave a mixed picture of the US labor market. US job growth picked up, though the share of workers holding multiple jobs was the highest since the Great Recession.

This week’s main economic focus will be consumer price inflation data for February, due on Wednesday, which follows a much hotter than expected report in January. Producer price data is scheduled for Thursday.

A report from the Federal Reserve Bank of New York on Monday showed that Americans grew more worried about the economic outlook in February even as their expectations of the future path of inflation were little changed.

The Treasury will sell USD 119 billion in coupon-bearing debt this week, including USD 58 billion in three-year notes on Tuesday, USD 39 billion in 10-year notes on Wednesday, and USD 22 billion in 30-year bonds on Thursday.

(Reporting by Karen Brettell in New York; Editing by Kevin Liffey, Kirsten Donovan, and Matthew Lewis)

Gold ticks lower, focus on US inflation print

Gold prices dipped on Monday as profit-taking countered support from safe-haven demand fuelled by geopolitical uncertainty, while focus was also on the US inflation print.

Spot gold fell 0.8% to USD 2,887.67 an ounce at 1740 GMT, after rising 2% in the previous week. US gold futures settled 0.5% lower at USD 2,899.40.

“There is a slight pause in gold prices due to some mild profit-taking and a weaker stock market. However, we might see some safe-haven bids later,” said Jim Wyckoff, senior analyst at Kitco Metals.

US stock index futures fell as worries persisted that tit-for-tat tariffs could affect the world’s largest economy.

President Donald Trump declined to predict whether the US could face a recession amid stock market concerns over his tariff actions.

Trump imposed new 25% tariffs on imports from Mexico and Canada last Tuesday, along with fresh duties on Chinese goods. But two days later, he exempted many imports from Mexico and some from Canada from those tariffs for a month.

“Uncertainty regarding trade wars and global economic recessions are all bullish for gold, record high levels are possible again. Weaker-than-expected data is going to be friendly for gold,” Wyckoff said.

Investors are also watching out for the US Consumer Price Index data due on Wednesday and the Producer Price Index print on Thursday. Traders are currently fully pricing in a US rate cut for June.

Federal Reserve Chair Jerome Powell said on Friday it remains to be seen if the Trump administration’s tariff plans would prove to be inflationary.

Lower rates boost the appeal of non-yielding bullion.

Spot silver fell 1.5% to USD 32.03 an ounce.

“Investment in silver is set for modest improvement… Still, broader economic concerns, particularly related to China’s economy, could dampen investor enthusiasm,” Marex consultant Edward Meir said in a note.

Data showed that China’s imports unexpectedly shrank over the January-February period, while the consumer price index fell at the sharpest pace in 13 months in February.

Platinum fell 0.4% to USD 959.35 and palladium was down 0.9% at USD 941.38.

(Reporting by Ashitha Shivaprasad in Bengaluru, additional reporting by Ishaan Arora; Editing by Leroy Leo and Shilpi Majumdar)

US recession risk provides tinder for smoldering market volatility: McGeever

ORLANDO, Florida – Financial market volatility has bubbled up to its highest level this year thanks to the chaotic implementation of US President Donald Trump’s protectionist trade agenda. While volatility hasn’t boiled over yet, investors would do well to guard against complacency, because tariff fatigue may push it over the edge.

Implied volatility in the S&P 500 as measured by the VIX index – Wall Street’s so-called fear index – is now the highest since the Fed cut interest rates in December, a decision markets interpreted as a mistake at the time. The VIX has almost doubled in the last month, and on Monday the three-month VIX spiked to its highest since August.

The ‘MOVE’ index of implied volatility in the US Treasury market is also the highest in four months, which is especially notable as it is accompanying a rally in Treasuries prices rather than a bond market selloff and rise in yields.

Volatility is still well below levels associated with past market crises, or even recent episodes like the 2023 US regional banking panic or Japan’s yen carry trade shock last August. Its recent rise certainly hasn’t matched the ongoing surge in policy uncertainty that, by some measures, has never been higher.

Analysts at JP Morgan put this suppression of volatility down to retail investors’ willingness to ‘buy the dip’, which has provided a “persistent backstop” to equities, the rise of ‘passive’ equity investing over ‘active’ management, and the strength of investor and corporate balance sheets.

They note that since the S&P 500’s peak on Feb. 19, US equity ETFs have only recorded one day of net outflows. Cumulative inflows over the period have exceeded USD 30 billion, which has helped limit the broader market decline.

But based on White House statements over the past few days and intensifying market ructions, it’s possible we’re soon going to see a true spike in volatility as investors start to question whether ‘buying the dip’ is such a good idea.

‘DETOX’ PERIOD

Warnings about further market turbulence are now coming from on high. US Treasury Secretary Scott Bessent said on Friday that the economy is entering a “detox” period, and Trump declined to rule out a recession in an interview with Fox News broadcast on Sunday.

Trump, who tweeted more than 150 times about the rising stock market during his first term, also said on Friday that he’s “not even looking at the market” and that there will likely be some “disruption” as his tariffs are implemented.

He’s not wrong there.

The so-called “Trump bump” is long gone. The S&P 500 is lower than it was before his November 5 election win and is now down nearly 10% from last month’s high and close to official correction territory. The Nasdaq is already in a correction, and has lost 14% in just three weeks after slumping another 4% on Monday.

And even if recession risks flagged by some GDP models prove to be unfounded, the economic outlook is still darkening rapidly. Economists at Morgan Stanley just cut their 2025 GDP growth forecast to 1.5% from 1.9%, and economists at Goldman Sachs trimmed theirs to 1.4% from 2.4%.

Economic growth at these below-trend rates is unlikely to sustain current equity valuations, hence the repricing currently underway, and the growing tariff fatigue should only exacerbate this downturn.

Every tariff announcement from Trump moving forward – whether it’s an unveiling, pause or exemption – is likely to be met with a selloff on Wall Street. If he doesn’t pull back, stocks fall on the feared economic impact; if he does pull back, stocks fall on the resulting chaos, confusion, and uncertainty.

“Trump’s leverage credibility with tariffs is quickly eroding,” says Alfonso Peccatiello, chief investment officer at Palinuro Capital.

The volatility dam has, by and large, held. But pressures are building. Investors may need to seek cover.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(By Jamie McGeever; Editing by Bill Berkrot)

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