Gold prices edged higher on Thursday, continuing recent gains as concerns over a hawkish Federal Reserve and President-elect Donald Trump’s potential trade tariffs spurred safe-haven demand.
Gold Prices React to Political and Economic Uncertainty
At 06:15 ET (11:15 GMT), spot gold rose 0.4% to $2,683.84 per ounce, while February gold futures climbed 0.3% to $2,668.60. Trading activity was expected to be subdued due to the U.S. holiday in honor of former President Jimmy Carter’s state funeral later in the day.
Safe-Haven Demand Amid Trump’s Trade Policies and Fed Minutes
Gold benefitted from increased safe-haven buying this week, driven by growing uncertainty surrounding Trump’s trade and immigration policies. A CNN report revealed that Trump might declare a national economic emergency to justify implementing broad trade tariffs, further unsettling markets.
Additionally, the release of the Federal Reserve’s December meeting minutes raised concerns over persistent inflation. Fed officials expressed worries that Trump’s protectionist policies could contribute to long-term inflationary pressures. The minutes also reaffirmed the Fed’s plan to slow interest rate cuts in 2025, which could keep Treasury yields and the U.S. dollar elevated.
Higher Yields and Strong Dollar Weigh on Precious Metals
While higher interest rates generally pose challenges for non-yielding assets like gold, other precious metals also saw modest gains. Platinum futures dipped 0.1% to $983.85 per ounce, while silver futures rose 0.8% to $30.93.
Copper Prices Climb on Weak China Inflation, Stimulus Hopes
Copper prices also firmed on Thursday, with benchmark copper futures rising 0.7% to $9,093.00 per ton. March copper futures rose 1.2% to $4.3115 per pound. Weak inflation data from China, the world’s largest copper importer, fueled optimism for further stimulus measures aimed at boosting growth in the country.
Despite strength in the dollar, which remains near two-year highs, metal markets were supported by expectations that China would ramp up fiscal stimulus in response to weak inflation.
Conclusion
Gold’s modest rise reflects the ongoing uncertainty over U.S. trade policies and inflation concerns, with safe-haven demand helping to buoy prices. While the stronger U.S. dollar and rising Treasury yields remain headwinds for gold, the ongoing geopolitical and economic challenges provide underlying support. Traders will continue to monitor developments in U.S. monetary policy and China’s economic response as key factors influencing gold and other precious metals.