Gold surged to a new record high early Friday on haven demand, jumping over $3200 an ounce amid market turmoil triggered by U.S. President Donald Trump’s latest round of tariffs and retaliatory actions from other countries.
The yellow metal has grown increasingly attractive to investors who fear that the tariffs will trigger a global recession. Stocks, bonds and the dollar weakened this week, making gold a more attractive alternate investment. The precious metal has also been boosted this year by central bank buying and expectations that the Federal Reserve will further ease monetary policy this year – an expectation reinforced by the latest U.S. inflation report.
Wholesale prices fell in March, per the Bureau of Labor Statistics’ report Friday. The producer price index fell a seasonally adjusted 0.4% for the month, after rising 0.1% in February. The forecast had been an increase of 0.2%. This is the first decline for PPI since October 2023.
The consumer price index fell to a six-month low in March, according to data released Thursday. Though the Fed has been waiting for signals that inflation is easing, fears about the tariffs and government jobs cuts’ effect on the labor market may influence the central bank’s upcoming decisions. The producer price index for March comes out Friday and will provide additional direction for investors.
June gold futures climbed 3.2% Thursday to settle at $3,177.50 an ounce on Comex, and the most-active contract increased 4.7% in the first four days of the week. Bullion gained 11% in March after rising 0.5% in February and adding 7.3% in January. It rallied more than $500, or 19%, in in the three months ended in March, the best quarter since 1986. The metal rose 27% in 2024, its biggest annual gain since 2010. The June contract is currently up $72.30 (+2.28%) an ounce to $3249.80 and the DG spot price is $3223.10.
Inflation fell to a lower-than-expected annual rate of 2.4% in March from 2.8% in February. Core CPI, excluding volatile food and energy prices, came in at 2.8%. The Fed’s target inflation rate is 2%. The Fed closely watches both inflation and the labor market when setting monetary policy. The U.S. monthly jobs report for March came out last week and showed that the employment rate ticked up, even though the economy added a stronger-than-expected 228,000 jobs.
Most investors tracked by the CME FedWatch Tool expect the Fed to begin interest rate cuts in June but keep them unchanged at the central bank’s next meeting in May. Lower interest rates are typically bullish for gold.
The Fed left rates unchanged at 4.25% to 4.50% in March. It reduced rates three times in 2024. The central bank 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 rallied 1.1% Thursday to settle at $30.76 an ounce on Comex, and the May contract rallied 5.2% in the first four days of the week. Silver advanced 9.9% in March after retreating 2.4% in February and adding 10% in January. It gained 21% in 2024. The May contract is currently up $0.941 (+3.06%) an ounce to $31.700 and the DG spot price is $31.64.
Spot palladium fell 0.5% Thursday to $921.00 an ounce. It rose 0.2%. in the first four days of the week. Palladium gained 7.3% last month after retreating 10% in February and advancing 11% in January. Palladium dropped 17% last year. The current DG spot price is up $12.10 an ounce to $929.00.
Spot platinum dropped 0.3% Thursday to $937.00 an ounce, but has gained 1.6% so far this week. Platinum increased 6.7% in March after sliding 4.7% in February and gaining 8.4% in January. Platinum lost 8.4% in 2024. The DG spot price is currently up $11.30 an ounce to $950.60.
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