Gold prices soared to unprecedented levels as concerns mounted over President Donald Trump’s assertive tariff strategies and a lackluster inflation report, casting shadows on the prospects for U.S. economic growth. Investors thus turned to gold as a safe haven, pushing bullion to $2,990.21 per ounce, surpassing previous records set recently.
This surge follows U.S. data revealing stagnant wholesale inflation in February, sparked by a significant decline in trade margins. Such data bolsters arguments for more flexible monetary policies as U.S. authorities strive to tackle ongoing inflationary pressures. Lower interest rates generally make gold more attractive, given its non-interest-bearing nature.
Meanwhile, yields for 10- and 30-year U.S. Treasuries reached their peak levels for the month, as investors gravitated towards government bonds amid growing pessimism about the prospects for economic growth in the U.S., which put pressure on equities.
Gold’s allure was heightened by reduced yields and increased haven demand, especially after the S&P 500 recently fell into its first correction of 10% in nearly two years, erasing around $5 trillion in market value since its February high.
Market sentiment was further shaken when Trump threatened to implement a 200% tariff on European alcoholic beverages, including wine and champagne. He also pointedly refused to retract newly imposed steel and aluminum duties or abandon plans for widespread reciprocal tariffs on global trade partners, anticipated to commence by April 2.
Amid these developments, financial institutions are growing more optimistic about gold’s trajectory, with Macquarie Group projecting a spike to $3,500 per ounce in the second quarter, while BNP Paribas SA adjusted its forecast upwards, anticipating average gold prices to exceed $3,000.
As of 10:00 AM in Thailand, spot gold was trading at $2,984.43 per ounce, poised for a 2.7% weekly increase, while the Bloomberg Dollar Spot Index remained unchanged.
Additionally, silver saw a slight dip after a notable rally exceeding 5% over the past three sessions, while platinum and palladium experienced gains.
