Gold held steady near $2,940 per ounce, close to record highs, as safe-haven demand surged amid concerns over US President Donald Trump's latest tariff plans.
Gold hovers at record levels
Trump's newly expanded tariffs now include lumber and forest products, in addition to previously announced duties on imported cars, semiconductors, and pharmaceuticals. This broadening of tariffs has intensified fears of rising inflation and further escalated trade tensions, fueling uncertainty in global markets. As a result, investors have flocked to gold as a store of value, which has supported its price near historic levels.
Rising holdings of SPDR Gold Trust
Investor appetite for gold is also reflected in the rising holdings of SPDR Gold Trust, the world’s largest gold-backed ETF, which reached 904.38 tonnes, the highest since August 2023. This increase indicates that market participants are seeking to hedge against potential economic instability and inflationary pressures stemming from escalating trade conflicts and policy uncertainties. With global economic growth facing headwinds due to tariff wars, gold remains an attractive asset for investors looking for safety amid volatility.
Market awaits US PCE data
Meanwhile, market attention is turning to the upcoming US Personal Consumption Expenditures (PCE) report, due on Friday. As the Fed’s preferred inflation gauge, the data will be closely scrutinized for signs of inflationary trends that could influence the central bank's decision-making. While the report is expected to show the slowest price growth since June, persistent inflationary pressures could prompt the Fed to remain cautious about cutting rates too soon. Most economists now expect the Fed to hold off on rate cuts until the next quarter, pushing back expectations for a March rate reduction. This cautious stance from the Fed, combined with ongoing trade concerns, is likely to keep gold prices elevated as investors continue to seek refuge from the potential economic fallout.
