Gold hit record high early Friday over the $2800 benchmark on tariff fears and then returned over that mark on this morning’s PCE data. The yellow metal is poised for its best month since March 2024 amid concerns about possible U.S. tariffs, which President Donald Trump has said will kick in Saturday.
December’s personal consumption expenditures price index (PCE) rose 2.6% on a year-over-year basis for the month, and core PCE was at 2.8%. While both were in line with market forecasts, they are ahead of the Fed’s 2% target. Personal income climbed 0.4% as forecast. The report comes out two days after the Fed left interest rates unchanged in the first policy meeting since July without a rate cut.
Gold prices have surged as a hedge against geopolitical and economic uncertainty from new U.S. administration policies on tariffs, trade and immigration.
April gold futures rose 1.9% Thursday to $2,845.20 an ounce on Comex, and the most-active contract gained 1.4% in the first four days of the week. Bullion is up 7.7% this month after dropping 1.5% in December and losing 2.5% in November. The metal gained 27% in 2024, its biggest annual gain since 2010. The April contract is currently up $5.10 (+0.18%) an ounce to $2850.30 and the DG spot price is $2809.90.
Trump said Thursday that he will follow through on a threat to impose 25% tariffs on imports from Canada and Mexico as of Feb. 1 to combat the movement of undocumented migrants and fentanyl across U.S. borders and trade deficits with the U.S.’s nearest neighbors.
Fed policymakers unanimously agreed Wednesday to keep their benchmark interest rate at 4.25% to 4.50%, despite Trump’s stated wishes for a rate cut. The central bank said unemployment “has stabilized at a low level” but “inflation remains somewhat elevated.”
The Fed cut rates three times last year, reducing its benchmark interest rate in September, November and December. Previously, the Fed had kept rates at 5.25% to 5.50% for a year after raising them by 5.25 percentage points since March 2022 to combat inflation. High interest rates are considered bearish for gold, while low rates and rate cuts are bullish.
Most investors aren’t pricing in rate reduction until June, according to investors tracked by the CME FedWatch Tool. About 82% expect rates to remain unchanged in March, compared with 18% anticipating a 25 basis point cut.
Front-month silver futures rose 3.5% Thursday to $32.49 an ounce on Comex, and the most-active March contract increased 4.2% in the first four days of the week. Silver is up 11% this month after dropping 6% in December and falling 5.1% in November. It gained 21% in 2024. The March contract is currently up $0.047 (+0.14%) an ounce to $32.540 and the DG spot price is $31.51.
Spot palladium slipped 50 cents so far this week to $1,001.50 an ounce. Palladium is up 7.9% this month after falling 6.7% in December and sliding 12% in November. Palladium dropped 17% last year. The current DG spot price is up $32.90 an ounce to $1017.50.
Spot platinum rallied 2.2% so far this week to $974.60 an ounce. Platinum is up 6.7% this month after losing 4.6% in December and declining 4.2% in November. Platinum slid 8.4% in 2024. The DG spot price is currently up $12.30 an ounce to $987.30.
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