Onome Amuge
Gold prices surged to fresh highs on Thursday, supported by soft inflation data in the U.S that fueled expectations of a potential interest rate cut, while President Donald Trump’s latest tariff threats further strengthened bullion’s safe-haven appeal.
As a result, spot gold climbed sharply, adding 1.2 percent to trade at $2,970.18 per ounce.
The latest U.S. inflation data, as measured by the Consumer Price Index (CPI), revealed a more modest increase of 0.2 percent in February, translating to an annual growth rate of 2.8 percent, slightly lower than market forecasts of 2.9 percent and a deceleration from the previous month’s figure of 3.0 percent.
This moderation in price pressures has fanned expectations among investors that the Federal Reserve may consider adopting a more accommodative stance on interest rates.
The probability of Federal Reserve interest rate cuts has increased, with markets currently pricing in three reductions over the course of 2025. The Fedwatch tool, which tracks market-based expectations for the central bank’s interest rate decisions, indicates that investors anticipate the first rate cut to occur as early as June 2025.
Lower interest rates tend to make holding non-yielding assets, such as gold, more attractive due to the reduced opportunity cost associated with not investing in interest-bearing assets.
Adding to the appeal of gold as a safe-haven asset is the persistent uncertainty surrounding U.S. trade policies. Trump’s latest comments on Wednesday regarding additional tariffs on European Union (EU) goods have intensified concerns over potential escalation in the ongoing trade war, leading investors to seek refuge in gold as a hedge against market volatility.
While gold prices found support from safe-haven demand, other precious metals failed to replicate the yellow metal’s performance, with both platinum futures and silver futures trading lower.
Platinum futures declined 0.7 percent, with the contract slipping to $990.10 an ounce, as the market demand for the metal failed to keep pace with that of gold. Silver futures also retreated, shedding 0.4 percent to trade at $33.593 an ounce.
