Gold prices rose on Thursday as the new U.S. auto tariffs raised global trade tensions ahead of the April 2 deadline for U.S. President Donald Trump’s reciprocal tariffs.
In the UAE, gold rates rose, with 24-carat gold gaining AED2 to AED365.75 and 22-carat rising AED1.5 to AED338.5. In addition, 21-carat gold climbed AED1.75 to AED324.75, and 18-carat gold ticked up AED1.25 to AED278.25.
Globally, spot gold gained 0.50 percent to $3,032.81 as of 6:08 GMT. Meanwhile, U.S. gold futures rose 0.49 percent to $3,067.19.
The U.S. dollar index fell 0.14 percent to 104.40, making bullion more attractive for other currency holders.
U.S. auto tariffs widen global trade war
On Wednesday, Trump announced a 25 percent tariff on imported cars and light trucks starting next week, further widening the global trade war. Investors also feared that Trump’s reciprocal tariffs, expected to take effect on April 2, might fuel inflation, slow economic growth and further fuel trade tensions.
Concerns over Trump’s tariff policies propelled gold prices to a record high of $3,057.21 on March 20. This uncertainty also forced the Federal Reserve to revise its growth outlook downward. The U.S. central bank also signaled that it would deliver two 25-basis-point interest rate cuts in 2025.
Rising global trade concerns overshadowed Wednesday’s upbeat macro data and weighed on the U.S. dollar. The U.S. commerce department reported that durable goods orders rose 0.9 percent in February, while core durable goods increased by 0.7 percent.
Chicago Fed President Austan Goolsbee noted that it might take longer than anticipated for the next rate cut due to economic uncertainty. Meanwhile, Minneapolis Fed President Neel Kashkari argued that the central bank has made a lot of progress in bringing inflation down but will have more work to do to get inflation back to the 2 percent target. Kashkari added that he is uncertain about the effect of Trump’s aggressive policies on the U.S. economy.
Gold prices to reach $3,300 this year
Goldman Sachs on Wednesday raised its 2025 gold price forecast to $3,300 per ounce from $3,100, citing stronger-than-expected ETF inflows and sustained central bank demand. The bank expects major Asian central banks to keep buying gold aggressively for the next three to six years to meet higher gold reserve targets.
On ETFs, Goldman Sachs expects more inflows from haven-seeking traders, especially in the event of a U.S. recession. This, coupled with increased demand for gold as a hedge, could push prices as high as $3,680 by the end of 2025.
Investors now await the U.S. personal consumption expenditures data, due on Friday, which could offer additional insight into the U.S. interest rate path. Last week, the U.S. central bank held its benchmark interest rate steady but signaled additional cut rates later this year. Non-yielding assets like gold tend to thrive in a low-interest-rate environment.
Commenting on the Fed’s monetary policy, St. Louis Fed President Alberto Musalem said that there is no urgency for the U.S. central bank to cut rates given the fact that restrictive policy is still needed to ensure inflation falls to the 2 percent target. He expected U.S. economic growth to remain decent but noted that prices may be pushed higher due to tariffs.
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Other precious metals
As gold prices rose, the precious metals market witnessed negative movement. Spot silver fell 0.06 percent to $33.69 an ounce, platinum lost 0.26 percent to $972.15, and palladium declined 0.34 percent to $964.88.
