Gold slumps on surging dollar and profit-taking, placing the bullion in line for its worst week this year. The yellow metal slipped further after the January inflation data came in flat.
January had slightly lower inflation as worries accelerated over President Donald Trump’s tariff plans, per this morning’s Commerce Department report. The personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, rose 0.3% for the month with a 2.5% annual rate. The numbers all were in line with Dow Jones forecast, strengthening beliefs that the central bank won’t change course for the time being on interest rates.
Trump on Thursday reiterated his promise to implement tariffs on Canada and Mexico on March 4, and said he would levy additional duties on goods from China. The remarks sent the dollar soaring, pressuring the yellow metal.
April gold futures fell 1.2% Thursday to settle at $2,895.90 an ounce on Comex, and the most-active contract lost 1.9% in the first four days of the week. Bullion is up 2.2% this 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 currently down $45.20 (-1.56%) an ounce to $2850.70 and the DG spot price is $2838.30.
The yellow metal has traded at record levels in recent weeks on haven demand and has been flirting with the key $3,000-an-ounce psychological threshold.
Trump said Thursday that 25% tariffs on Mexican and Canadian goods will take effect Tuesday. He also threatened to add another 10 percentage points to the 10% tariffs previously imposed on China. The three nations are the largest U.S. trading partners.
Separately, the inflation measure due out Friday – the personal consumption expenditures price index – will be closely watched for signals on whether the Fed will resume interest rate cuts it previously anticipated this year or hold them to keep inflation under control. The Conference Board’s Consumer Confidence Index for February, which came out Tuesday, fell for a third straight month amid expectations for higher inflation.
The Fed 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 94.5% expect rates to remain unchanged in March, compared with 5.5% anticipating a 25 basis point cut.
The Fed kept its benchmark interest rate at 4.25% to 4.50% last month. It was the central bank’s first policy meeting since July 2024 without a rate cut after three reductions last year. 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.
Other data out Thursday showed that the U.S. economy grew at a slower pace in the fourth quarter than the third, but the fourth-quarter figure came in in line with economists’ estimates. Meanwhile, initial jobless claims for last week rose to the highest level this year in separate data out Thursday.
Front-month silver futures fell 1.4% Thursday to settle at $32.11 an ounce on Comex, and the May contract is down 3.7% so far this week. Silver is down 0.5% this month after adding 10% in January and dropping 6% in December. It gained 21% in 2024. The May contract is currently down $0.720 (-2.24%) an ounce to $31.390 and the DG spot price is $30.91.
Spot palladium lost 0.4% Thursday to $931.50 an ounce and is down 5.3% in the first four days of the week. Palladium retreated 9.9% so far this month after advancing 11% in January and falling 6.7% in December. Palladium dropped 17% last year. The DG spot price is currently down $7.30 an ounce to $925.50.
Spot platinum slid 1.3% Thursday to $962.80 an ounce and is down 1.3% so far this week. Platinum is down 2.8% this month after gaining 8.4% in January and losing 4.6% in December. Platinum slid 8.4% in 2024. The current DG spot price is down $17.30 an ounce to $946.40.
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