Gold prices continued their record-breaking rally during Friday's Asian session, poised for a second consecutive weekly gain as escalating trade tensions sparked by United States President Donald Trump and growing expectations of monetary policy easing by the Federal Reserve fueled demand for the precious metal.
By 3:30 pm AEDT (4:30 am GMT), spot gold was up $3.10, or 0.1%, at $2,991.41 per ounce.
However, a slight up tick in the U.S. dollar index and rising U.S. Treasury yields have tempered some of gold’s upward momentum.
Market sentiment improved amid fading concerns over a potential U.S. government shutdown and optimism surrounding U.S.-Canada trade talks.
Ontario Premier Doug Ford confirmed another meeting between Canadian and American trade officials next week, following discussions with U.S. Commerce Secretary Howard Lutnick. “We were having very productive conversations, and it turned out very, very well,” Ford stated.
However, broader uncertainty remains as tensions between the U.S. and the European Union escalate. In response to sweeping U.S. tariffs on steel and aluminium, the EU imposed a 50% tax on American whiskey exports, prompting Trump to threaten a 200% tariff on European wines and spirits.
If fears of a full-scale trade war escalate, recession risks could rise, increasing the likelihood of further Fed rate cuts while driving gold prices to new record highs.
ANZ analysts noted: “Gold touched a new record high after modest U.S. inflation supports the case for further cuts by the Federal Reserve. Swap traders are now fully pricing in another 25 basis point (bp) cut in June, with about 70bp of easing seen for all of 2025. Rising trade tensions also boosted haven buying of the precious metal.”
Meanwhile, markets are also assessing the latest developments in U.S.-Russia ceasefire negotiations regarding the Ukraine conflict.
Russian President Vladimir Putin stated on Thursday that he agreed with U.S. proposals to halt the fighting.
“Maybe I should call President Trump and have a discussion with him. But we support the idea of ending this conflict by peaceful means,” Putin said.
