Core inflation also eased to 3.1%, further fueling speculation that the Fed could cut rates by 25 basis points in June, July, and October. With inflation cooling, gold remains an attractive alternative to interest-bearing assets.
Trade Disputes Increase Market Uncertainty
Beyond monetary policy, ongoing trade tensions have added another layer of uncertainty. The U.S. imposed a 25% tariff on steel and aluminum imports, prompting retaliatory measures from the European Union and Canada.
- The EU plans to impose tariffs on $28 billion worth of U.S. goods next month.
- Canada has placed 25% tariffs on over $20 billion worth of American products.
These escalating trade restrictions have increased concerns about slower global economic growth. As a result, investors have turned to gold as a hedge against potential economic disruptions.
Markets Await U.S. Producer Price Index for Direction
Despite the bullish trend in gold, traders remain cautious ahead of the U.S. Producer Price Index (PPI) report, which could influence Federal Reserve policy and impact the U.S. dollar and gold prices.
For now, gold’s upward trajectory remains intact, supported by the weakening dollar, expectations of lower interest rates, and ongoing trade uncertainties.
Traders are watching the $2,955 resistance level, as a breakout could push prices higher, while a dip below $2,930 could signal a shift in momentum.
