Gold steady despite this morning’s inflation report that came in lower than expected, with the bullion getting support from tariff concerns.
The U.S. consumer price index shows slowing inflation for February which saw a 0.2% increase for the consumer price index for both all-items and core, slightly below expectations. Headline inflation was at 2.8%, while core was at 3.1%, on an annual basis. Both measurements were also 0.1 percentage point below the forecast.
Next up, the producer price index that comes out on Thursday. The Federal Reserve has said it closely watches both inflation and the labor market when determining monetary policy. Interest rate cuts are bullish for gold, making the yellow metal a more attractive investment than some other assets.
The reports come out after a tumultuous few days in global markets as equities and other assets reacted to U.S. President Donald Trump’s tariff threats and reciprocal moves by trading partners. The uncertainty has increased concern about the possibility of a recession. Gold is a typical hedge against economic and political uncertainty and remains trading near recent record highs. But news of a possible 30 day ceasefire between Russia and Ukraine kept a lid on prices.
April gold futures rose 0.7% Tuesday to settle at $2,920.90 an ounce on Comex and the most-active contract was up 0.2% in the first two days of the week. Bullion rose 0.5% last month after gaining 7.3% in January and dropping 1.5% in December. The metal rose 27% in 2024, its biggest annual gain since 2010. The April contract is slight down $0.20 (-0.01%) an ounce to $2920.70 and the DG spot price is $33.12.
Trump on Tuesday threatened to double tariffs on Canadian steel and aluminum to 50% after Ontario said it would place a surcharge on electricity sent to the U.S. Both sides rolled back the moves by the end of the day, but the moves kept investors on edge.
Fears of a recession have put the Fed’s plans to further cut interest rates into question. The central bank cut rates three times in 2024, but most investors aren’t pricing in a Fed rate reduction until June, according to investors tracked by the CME FedWatch Tool. About 99% expect rates to remain unchanged in March, compared with 1% anticipating a 25 basis point cut.
The Fed kept its benchmark interest rate at 4.25% to 4.50% in January. It was the central bank’s first policy meeting since July 2024 without a rate cut. The Fed began raising interest rates in March 2022 to fight inflation, ultimately imposing increases of by 5.25 percentage points before beginning rate cuts last year. Previously, the Fed had kept rates at 5.25% to 5.50% for a year.
Front-month silver futures added 1.9% Tuesday to settle at $33.15 an ounce on Comex, and the May contract increased 1% in the first two days of the week. Silver retreated 2.4% in February after adding 10% in January and dropping 6% in December. It gained 21% in 2024. The May contract is currently up $0.323 (+0.97%) an ounce to $33.470 and the DG spot price is $33.08.
Spot palladium slipped 0.2% Tuesday to $952.00 an ounce and is down 0.6% so far this week. Palladium retreated 10% in February after advancing 11% in January and falling 6.7% in December. Palladium dropped 17% last year. Currently, the DG spot price is up $8.30 an ounce to $959.50.
Spot platinum gained 1.3% Tuesday to $980.80 an ounce and gained 1.3% in the first two days of the week. Platinum slid 4.7% last month after gaining 8.4% in January and losing 4.6% in December. Platinum slid 8.4% in 2024. The DG spot price is currently up $14.80 an ounce to $986.40.
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