PT Rifan Financindo Berjangka – Gold Hits Record High as Trump Tariff Threats Aid Haven Demand
Gold rose to a record high as investors flocked to safety after US President Donald Trump reiterated threats to impose tariffs on Mexico and Canada.
Bullion rose as much as 0.2% to $2,799.65 an ounce after prices jumped 1.3% on Thursday, blowing past the previous all-time peak set in October. The surge came after Trump said he would follow through on imposing 25% levies on imports from Canada and Mexico on Feb. 1. He also threatened China with tariffs, without specifying a level.
The precious metal, which is on track for its fifth consecutive weekly gain, has benefited from haven demand as Trump’s tariff threats spur fears of trade wars that could sap economic growth. There are also worries that his pledges to cut taxes and overhaul immigration may erode US finances and reignite inflation. Federal Reserve Chair Jerome Powell said Wednesday the US central bank was in a “wait-and-see” mode with regard to the potential impact of the new administration’s policies.
The Federal Open Market Committee this week left interest rates unchanged as expected — after cutting them at each of the three previous meetings since September — and indicated that stalled progress toward lower inflation warranted a patient approach.
Elsewhere, traders will be focused on the Fed’s favored inflation gauge, the personal consumption expenditures index — due later Friday. It’s expected to show a small acceleration in price hikes, according to the median forecast of economists surveyed by Bloomberg.
Spot gold rose 0.1% to $2,797.82 an ounce as of 8:22 a.m. in Singapore. The Bloomberg Dollar Spot Index added 0.1%. Silver, palladium and platinum were steady.
Source: Bloomberg
Gold price surges to record high and hovers near $2,800
Gold price skyrockets to a new all-time high (ATH) of $2,798 on Thursday after economic data from the United States (US) indicated the economy is slowing down, warranting the Federal Reserve (Fed) to lower interest rates despite holding them steady at Wednesday’s meeting. At the time of writing, the XAU/USD trades at $2,794, up 1.31%.
The yellow metal exploded on Thursday after being contained by the $2,770 figure for the last three days. US Treasury yields edged lower as traders grew disappointed following the last reading of 2024 of the fourth quarter Gross Domestic Product (GDP), which, although expanding, did so at a lower rate than expected.
Meanwhile, the jobs market remains robust, as the number of people applying for unemployment benefits decreased compared to the previous reading, according to the US Department of Labor.
Bullion prices soared, although the Fed held rates unchanged on Wednesday. Fed Chair Jerome Powell stated that policy is well-positioned and that they are not in a rush to cut interest rates.
US GDP for Q4 204 dipped from 3.1% in Q3 to 2.3%, missing the mark. According to the US Department of Labor, Initial Jobless Claims for the week ending January 24 fell to 207K, coming in lower than the expected 220K and the previous week’s 223K.
Gold’s advance is also sponsored by the fall of US yields. The US 10-year T-note yield dropped two basis points down to 4.516%. US real yields, as measured by the 10-year Treasury Inflation-Protected Securities (TIPS), followed suit, tumbling two basis points to 2.138%.
Bullion prices are also unfazed by a hawkish Fed, which unanimously voted to keep interest rates steady at 4.25% – 4.50% on Wednesday. The central bank cited a resilient US economy, limited progress in reducing inflation, and a recovering labor market as key factors behind the decision.
While Trump’s plans are still unclear, he set a deadline of Saturday for tariffs of 25% on Mexico and Canada, and has also said he intends to impose across-the-board levies that are “much bigger” than the 2.5% figure previously suggested by Treasury Secretary Scott Bessent.
The swaps market is pricing 50 bps of Fed rate cuts in 2025.(Cay) PT Rifan Financindo Berjangka.
Source: Fxstreet