At 11:54 GMT, XAU/USD is trading $2916.45, up $12.49 or +0.43%.
Gold Gains on Trade War Concerns and Dollar Weakness
Gold’s rise is also being fueled by renewed concerns over U.S. trade policies. President Donald Trump’s announcement of reciprocal tariffs on countries that tax U.S. imports has injected uncertainty into global markets, boosting demand for safe-haven assets.
A weaker U.S. dollar is adding further support. The dollar index fell 0.2%, making gold more affordable for foreign buyers. Meanwhile, investors remain focused on upcoming U.S. inflation data, with the Producer Price Index (PPI) release expected at 13:30 GMT, followed by Friday’s retail sales report.
Hot Inflation Data Sparks Market Reactions
Gold initially fell over 1% on Wednesday after U.S. consumer price index (CPI) data came in hotter than expected. January’s CPI rose 0.5% month-over-month, exceeding forecasts of 0.3%, while annual inflation hit 3%, slightly above the anticipated 2.9%. Core inflation, which excludes food and energy, also exceeded expectations at 3.3% year-over-year.
Federal Reserve Chair Jerome Powell reiterated that the central bank is in no rush to cut interest rates, reinforcing market expectations that the Fed will remain cautious. Futures markets have adjusted, now pricing in a 78% chance of a 25-basis-point rate cut by September, with expectations rising to 94% by October.
Treasury Yields in Focus as Traders Await PPI Data
U.S. Treasury yields initially spiked following the CPI release but pulled back on Thursday as traders digested the inflation data and awaited further insights from the PPI report. The hotter-than-expected CPI print raised concerns that inflation remains sticky, potentially delaying Fed rate cuts.
