Gold News: Tariff Threats and Fed Caution Fuel Record Rally

Fed Inflation Concerns Bolster Gold’s Appeal

Gold prices edged to a record high on Thursday, reaching $2,954.96 per ounce, as mounting trade tensions under U.S. President Donald Trump intensified demand for the safe-haven metal.

Gold traditionally benefits during periods of economic and geopolitical uncertainty, offering traders a hedge against market volatility and inflation risks. With the Federal Reserve highlighting inflation concerns tied to trade and immigration policies, gold’s appeal as a defensive asset has strengthened further.

At 12:38 GMT, XAU/USD is trading $2941.55, up $10.29 or +0.35%.

Trump Tariff Threats Spark Market Anxiety

Trump’s announcement of potential new tariffs on lumber, cars, semiconductors, and pharmaceuticals has stoked fears of a global trade war. The president’s aggressive stance, including prior tariffs of 10% on Chinese imports and 25% on steel and aluminum, could push up import costs and ignite broader inflation. As inflation erodes the value of fiat currencies, investors often turn to gold as a store of value, driving prices higher​.

Fed Holds Rates as Inflation Risks Loom

Minutes from the Federal Open Market Committee’s (FOMC) January 28-29 meeting revealed the Fed’s cautious approach, keeping the benchmark interest rate steady between 4.25% and 4.5%​. The Fed underscored risks that Trump’s economic policies could undermine disinflation efforts. With the central bank prioritizing stability, its reluctance to cut rates may reduce the appeal of interest-bearing assets, making non-yielding gold a more attractive option for investors.

Market Reacts to Potential Quantitative Tightening Pause

The Fed’s internal discussions about potentially pausing its quantitative tightening (QT) program reflect growing concerns about market liquidity. A halt in QT could slow the reduction of market liquidity, which historically supports higher gold prices. As liquidity risks and Treasury debt management challenges mount, gold’s role as a safe-haven asset gains traction among traders​.

Gold Price Forecast: Bullish Bias as Traders Eye $3,000

Gold’s bullish momentum remains intact, with the $3,000 level now a key psychological target. While technically overbought, the metal’s resilience suggests strong underlying demand.

Traders should monitor for a closing price reversal top, which could indicate a short-term pullback, with support at $2,864.33. However, persistent inflation concerns and tariff-driven volatility are likely to keep gold in favor.

Given the macroeconomic backdrop, gold is poised to outperform as investors seek stability and inflation protection.

More Information in our Economic Calendar.