Gold ticks down, early Wednesday on tariff uncertainties while sticking above the $2900 line, after a two-day rally that focused on trade war fears. Investors now await this week’s U.S. jobs data.
Duties of 25% were imposed on Canada and Mexico on Tuesday and an additional 10% levy on goods from China. The yellow metal came under some pressure, though, amid a stronger U.S. dollar and Treasury yields.
John Williams, president of the Federal Reserve Bank of New York, said Tuesday that the tariffs may increase U.S. inflation. But he endorsed the Fed’s current monetary policy, which is expected to include interest rate cuts this year. The Fed began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year.
The next key economic indicator that may determine future Fed action is the U.S. monthly jobs report due out Friday. The Fed has said it closely watches both inflation and the labor market when determining monetary policy. The Fed’s favorite inflation measure came out last week and showed that core prices of goods were in line with expectations.
April gold futures rose 0.7% Tuesday to settle at $2,920.60 an ounce on Comex and the most-active contract gained 2.5% in the first two days of the week. Bullion rose 0.5% last month after gaining 7.3% in January and dropping 1.5% in December. The metal rose 27% in 2024, its biggest annual gain since 2010. The April contract is currently down $1.50 (-0.05%) an ounce to $2919.10 and the DG spot price is $2916.40.
Equities tumbled around the world Tuesday as the trade war escalated, but began to rally early Wednesday. Trump defended his economic agenda in an address to Congress late Tuesday.
“There’ll be a little disturbance, but we’re OK with that,” he said in the speech. “It won’t be much.”
The state of the economy will be critical to the Fed’s next moves. And interest rate cuts are bullish for gold, making the yellow metal a more attractive investment than some other assets.
The Fed cut rates three times in 2024, but most investors aren’t pricing in a Fed rate reduction until June, according to investors tracked by the CME FedWatch Tool. About 91% expect rates to remain unchanged in March, compared with 9% anticipating a 25 basis point cut. The Fed kept its benchmark interest rate at 4.25% to 4.50% in January. It was the central bank’s first policy meeting since July 2024 without a rate cut after three reductions last year. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
Front-month silver futures added 0.2% Tuesday to settle at $32.38 an ounce on Comex, and the May contract increased 2.8% in the first two days of the week. Silver retreated 2.4% in February after adding 10% in January and dropping 6% in December. It gained 21% in 2024. The May contract is currently up $0.319 (+0.99%) an ounce to $32.700 and the DG spot price is $32.38.
Spot palladium rose 0.8% Tuesday to $960.50 an ounce and rallied 3.4% so far this week. Palladium retreated 10% in February after advancing 11% in January and falling 6.7% in December. Palladium dropped 17% last year. Currently, the DG spot price is down $2.00 an ounce to $953.00.
Spot platinum gained 1.3% Tuesday to $970.00 an ounce and is up 2.8% this week. The World Platinum Investment Council (WPIC) raised its 2025 platinum market deficit forecast by 57%, and its 2024 deficit estimate by 46%. Read their full press release here. Platinum slid 4.7% last month after gaining 8.4% in January and losing 4.6% in December. Platinum slid 8.4% in 2024. The DG spot price is currently up $10.40 an ounce to $978.80.
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