Gold prices lifted above US$2,900 in Asian trade on Thursday after experiencing sharp volatility in the previous session as investors remain focused on U.S. inflation data and President Donald Trump’s tariff plans.
By 3:35 pm AEDT (4:35 am GMT) spot gold prices were up by $13.81 or 0.5% to US$2,918.12 per ounce, just 0.8% below record highs touched earlier in the week.
The White House signalled late Wednesday that Trump’s proposed reciprocal tariffs could be enacted as early as Thursday, sustaining safe-haven demand for gold.
However, traders remain cautious about extending bullish positions, given growing expectations that the Federal Reserve (Fed) may delay interest rate cuts until Q3 2025.
Gold briefly dipped to $2,865 on Wednesday following a rally in U.S. Treasury yields, triggered by hotter-than-expected inflation data.
The U.S. Consumer Price Index (CPI) rose 3% in January, up from 2.9% in December, while core inflation unexpectedly increased to 3.3% from 3.2%.
Fed Chair Jerome Powell, addressing lawmakers on Wednesday, reiterated that inflation remains above target, suggesting the Fed is in no rush to cut rates further.
Despite the Fed’s hawkish stance, gold quickly rebounded as investors bought the dip, reaffirming its role as an inflation hedge.
Attention now shifts to the U.S. producer price index (PPI) due later on Thursday, which could offer further insights into the Fed’s policy direction.
