Gold Holds Steady on Safe Haven Demand Amid Fed and Trump’s Policy Jitters

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Gold prices held steady in Asian trade on Thursday after two consecutive days of gains, driven by increased uncertainty over a hawkish Federal Reserve and President-elect Donald Trump’s proposed trade tariffs, which sparked some demand for safe haven assets.

In industrial metals, copper prices rose as weak inflation data from China, the world’s top importer, fueled expectations for further stimulus measures from Beijing.

However, metal markets faced pressure from a stronger U.S. dollar, which approached its highest level in over two years amid the Fed’s hawkish signals.

Spot gold declined by 0.1% to $2,660.36 per ounce, while February gold futures saw a slight increase of 0.2% to $2,678.60 per ounce by 00:11 ET (05:11 GMT).

Gold received some safe haven support this week as uncertainty surrounding Trump’s trade and immigration policies dampened risk appetite.

A CNN report suggested Trump might declare a national economic emergency to legally justify imposing broad trade tariffs.

The Federal Reserve’s December meeting minutes added to concerns, revealing that policymakers were worried about persistent inflation, exacerbated by Trump’s expansionary and protectionist policies.

The minutes also indicated the Fed's plan to slow down interest rate cuts in 2025, with the central bank halving its expected rate cuts for that year.

Following the release of the Fed’s minutes, Treasury yields and the dollar rose. Higher rates are unfavorable for non-yielding assets like gold, as they raise the opportunity cost of investing in these metals.

Other precious metals showed mixed movements on Thursday. Platinum futures fell 0.1% to $983.75 per ounce, while silver futures rose 0.3% to $30.785 per ounce.

In the industrial metal market, copper futures on the London Metal Exchange rose by 0.4% to $9,053.50 per ton, and March copper futures increased 0.6% to $4.2927 per pound.

Chinese inflation data showed a flat Consumer Price Index (CPI) in December, while Producer Price Index (PPI) inflation declined for the 27th consecutive month, indicating weak disinflation.

Despite this, Beijing’s aggressive stimulus measures in late 2024, coupled with the weak inflation data, raised expectations that the government would introduce more support measures to boost Chinese growth, particularly on the fiscal side.

 

 

 

 

Paraphrasing text from "Investing.com" all rights reserved by the original author.