Gold steadies as trade war concerns lend support

Gold prices steadied on Wednesday, buoyed by safe-haven demand amid fears of a global trade war spurred by US President Donald Trump’s new tariffs as the market digested hotter-than-expected US inflation data.

Spot gold was steady at USD 2,895.30 per ounce as of 2:39 p.m. ET (1939 GMT). US gold futures settled 0.1% lower at USD 2,928.70.

Prices dropped more than 1% after data showed the US consumer price index jumped 0.5% last month, more than expected, reinforcing the Federal Reserve’s message that it was in no rush to resume cutting interest rates amid growing uncertainty over the economy.

“With today’s CPI data coming in hotter-than-expected, that has put weight on the gold market. Obviously, at this point, any expectation that the market would have had of any type of rate cut later this year has now been put down,” said David Meger, director of metals trading at High Ridge Futures.

Higher interest rates tend to weigh on bullion, increasing its opportunity cost as it yields no interest.

While, “higher interest rate storyline provided a little bit of pressure on gold, the trend remains positive, and trade concerns continue to drive the market,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.

After raising steel and aluminum tariffs to 25% earlier this week, US President Donald Trump’s advisers are now finalizing plans for reciprocal tariffs.

Gold prices have marched into uncharted territory as bulls latch on to economic uncertainty created by US import tariff plans, but behind the prize of hitting a record USD 3,000 per ounce, some flags of a bear case are also being planted.

Despite a minor sell-off, even a drop of a few hundred dollars from near USD 3,000 isn’t catastrophic, said Daniel Pavilonis, senior market strategist at RJO Futures, adding that with concerns about inflation, debt and geopolitics, people are still driven to invest in gold.

Spot silver rose 1.1% to USD 32.17 per ounce and palladium fell 0.2% to USD 973.74, while platinum added 0.6% to USD 989.43.

(Reporting by Anmol Choubey and Swati Verma in Bengaluru; Editing by Shailesh Kuber)