Gold hits record high on Monday driven by safe-haven buying on tariffs which have added to concerns of inflation that would dent economic growth. Spot gold hitting a record of $2,818.58 while U.S. gold futures rose 0.7% to $2,855.90.
U.S. President Donald Trump signed an executive order over the weekend imposing 25% tariffs on Canada and Mexico and 10% on China. They’re set to go into effect Tuesday and sent the U.S. currency climbing, making gold a less attractive alternate investment. The yellow metal just came off its best month since March 2024 – and a new record high last week – amid concerns about Trump’s policies on tariffs, trade and immigration.
April gold futures rose 1% last week to $2,835.00 an ounce on Comex, though the most-active contract lost 0.4% Friday. Bullion increased 7.4% last month after dropping 1.5% in December and losing 2.5% in November. The metal gained 27% in 2024, its biggest annual gain since 2010. The April contract is currently up $23.30 (+0.82%) an ounce to $2858.30 and the DG spot price is $2826.40.
While the dollar climbed early Monday, there was a broad selloff across asset classes including gold.
Trump planned talks Monday with Canada and Mexico before the tariffs come into force. Both countries have said they would enact reprisals. China said it would file a complaint with the World Trade Organization.
Trump also said over the weekend that tariffs on EU goods would “definitely happen.”
Gold prices fell Friday after the Federal Reserve’s favorite inflation measure, the personal consumption expenditures price index, showed the prices of goods heated up again in December. Worsening inflation may delay the Fed’s anticipated interest rate cuts later this year.
So-called core PCE, which excludes volatile food and energy prices, rose 0.2% in December from a month earlier and 2.8% from a year earlier, according to the data out Friday. Both figures were in line with economists’ estimates. Including food and energy prices, monthly PCE rose 0.3% and 2.6% on an annual basis, both also in line with estimates.
The central bank had been gradually easing interest rates in response to stabilizing inflation, though Fed policymakers unanimously agreed last week to keep their benchmark interest rate at 4.25% to 4.50%, despite Trump’s stated wishes for a rate cut.
It was the Fed’s first policy meeting since July without a rate cut. The Fed cut rates three times last year, reducing its benchmark interest rate in September, November and December. Previously, the Fed had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to combat inflation. High interest rates are considered bearish for gold, while low rates and rate cuts are bullish.
Most investors aren’t pricing in rate reduction until June, according to investors tracked by the CME FedWatch Tool. About 84% expect rates to remain unchanged in March, compared with 16% anticipating a 25 basis point cut.
Front-month silver futures rose 3.5% last week to $32.27 an ounce on Comex, though the most-active March contract decreased 0.7% Friday. Silver added 10% last month after dropping 6% in December and falling 5.1% in November. It gained 21% in 2024. The March contract is currently up $0.135 (+0.42%) an ounce to $32.400 and the DG spot price is $31.53.
Spot palladium rallied 3.2% last week to $1,034.00 an ounce after rising by the same amount Friday. Palladium advanced 11% last month after falling 6.7% in December and sliding 12% in November. Palladium dropped 17% last year. Currently, the DG spot price is down $21.80 an ounce to $1020.50.
Spot platinum rallied 3.9% last week to $990.00 an ounce after increasing 0.8% Friday. Platinum gained 8.4% in January after losing 4.6% in December and declining 4.2% in November. Platinum slid 8.4% in 2024. The DG spot price is currently down $33.60 an ounce to $975.10.
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