Gold prices increased on Thursday as markets closely watched for developments in U.S. President Donald Trump’s tariff plans, which could trigger a global trade war. Investors also awaited the release of critical U.S. data due later in the day.
In the UAE, gold rates recorded a notable surge, with 24-carat gold gaining AED4.25 to AED351.75 and 22-carat gold rising AED3.75 to AED327.25. Meanwhile, 21-carat gold rose by AED3.75 to AED313.75 and 18-carat gold increased by AED3.25 to AED269.
Globally, spot gold climbed 0.63 percent to $2,920.16 per ounce, as of 5:35 GMT. Gold hit a new record high of $2,942.70 on Tuesday. Meanwhile, U.S. gold futures gained 0.67 percent to $2,948.37.
Trade war fears rise
President Trump said he would impose reciprocal tariffs as soon as Wednesday evening on every country that charges duties on U.S. imports, further raising fears of a widening global trade war that would support gold prices.
Trump also signed executive orders on Monday to impose 25 percent tariffs on steel and aluminum imports into the U.S. Mexico, Canada and the European Union criticized Trump’s decision to impose tariffs on all steel and aluminum imports starting next month, heightening concerns of a significant global trade conflict as investors brace for additional trade duty announcements.
Trump had previously announced tariffs targeting Canada, Mexico and China but suspended those for the neighboring countries the following day.
Last week, the World Trade Organization announced that China initiated a dispute over the U.S. tariffs. China also declared tariffs on certain U.S. goods in retaliation to President Donald Trump’s 10 percent levy on Chinese imports. This marked a new trade war between the world’s top two economies, which continued to raise safe-haven demand for gold and further supported the surge in prices.
U.S. inflation rises
The U.S. Bureau of Labor Statistics reported on Wednesday that the headline U.S. consumer price index rose 0.5 percent in January, the most since August 2023, and the yearly rate climbed to 3 percent from 2.9 percent in December.
Meanwhile, the core CPI, which excludes food and energy prices, nudged up by 0.4 percent on a monthly basis and jumped 3.3 percent from a year ago, pointing to stubborn underlying inflationary pressures.
Federal Reserve Chair Jerome Powell told U.S. lawmakers that the battle with rising prices wasn’t done yet and any further interest rate cuts would have to wait until it was clear inflation would return to the 2 percent target. Gold is considered a hedge against inflation, but higher interest rates dampen the non-yielding asset’s appeal.
The Atlanta Fed President noted that the labor market is performing incredibly well and the GDP is more resilient than expected but the latest inflation numbers show careful monitoring is still needed. Market participants were quick to react and now see just one Fed rate cut by the end of this year, assisting the yield on the benchmark 10-year U.S. government bond to register its biggest one-day rise since December.
Investor attention now shifts to the producer price index (PPI) data, scheduled at 13:30 GMT, for further insights on the monetary policy’s outlook.
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Other precious metals
As gold prices rose, the precious metals market saw positive movement on Thursday. Spot silver climbed 0.34 percent to $32.33 per ounce, platinum gained 0.16 percent to $994.10 and palladium rose 1.31 percent to $986.35.
