Gold rallied early Friday, trading near an all-time record high and poised for a weekly gain on haven demand, as investors sought a hedge against geopolitical and economic uncertainty from U.S. President Donald Trump’s new policies on tariffs, trade and immigration.
Trump told business and political leaders gathered for the World Economic Forum in Davos, Switzerland, on Thursday to make their products in the United States or else face stiff tariffs. In remarks delivered by video, he also said he would ask Saudi Arabia and other OPEC nations to “bring down the cost of oil” and that he would demand that the Federal Reserve immediately drop interest rates. High rates are considered bearish for gold.
The Fed cut rates three times last year, but most investors aren’t pricing in another rate reduction until June, according to investors tracked by the CME FedWatch Tool, because of stubbornly high inflation. Fed policymakers are almost unanimously expected to keep interest rates unchanged next week, with just 0.5% betting on another 25 basis point cut.
The Fed reduced its benchmark interest rate in September, November and December. It’s now at 4.25% to 4.50%. Previously, the central bank 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. The Fed’s favorite inflation measure, the personal consumption expenditures price index, comes out next week, two days after the Fed’s monetary policy announcement.
Investors were awaiting University of Michigan U.S. consumer sentiment data on Friday for further direction.
Front-month gold futures fell 0.2% Thursday to $2,765.00 an ounce on Comex. The most-active February contract gained 0.6% so far this week, though most U.S. financial markets were closed Monday for the Martin Luther King Jr. Day holiday. Bullion dropped 1.5% in December after losing 2.5% in November and rising 3.4% in October. The metal gained 27% in 2024, its biggest annual gain since 2010. The February contract is currently up $17.30 (+0.63%) an ounce to $2782.30 and the DG spot price is $2780.70.
The yellow metal is considered a safe asset during times of economic or political uncertainty.
Gold also attracted risk-off demand from Trump’s efforts to crack down on undocumented immigrants to the U.S. Many economists have forecast that the mass deportations he promised during the campaign would hurt the economy, along with tariffs. Trump has said he’ll impose 25% tariffs on goods from Canada and Mexico and a 10% tariff on Chinese imports to the U.S.
Front-month silver futures decreased 1.9% Thursday to $30.84 an ounce on Comex, and the most-active March contract lost 1% so far this week. Silver dropped 6% in December after falling 5.1% in November and advancing 4.3% in October. It gained 21% in 2024. The March contract is currently up $0.433 (+1.40%) an ounce to $31.275 and the DG spot price is $30.77.
Spot palladium gained 1.3% Thursday to $1,017.50 an ounce and is up 5.9% this week. Palladium fell 6.7% in December after sliding 12% in November and increasing 11% in October. Palladium dropped 17% last year. The current DG spot price is up $9.80 an ounce to $1016.50.
Spot platinum lost 0.4% Thursday to $957.80 an ounce but is up 0.8% this week. Platinum lost 4.6% last month after declining 4.2% in November and rising 1.5% in October. Platinum slid 8.4% in 2024. The DG spot price is currently up $5.50 an ounce to $957.90.
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