Gold nudges higher with Trump challenges EU on tariffs

LONDON (March 13) Gold’s price (XAU/USD) is back on track for new all-time highs after the United States (US) Consumer Price Index (CPI) data came in softer than expected on Wednesday, which triggered a sigh of relief in US markets with odds for a recession or stagflation being trimmed. This in turn caused an outflow in US bonds and an inflow in US equities, with the sell-off in bonds sparking a boost in yields. The precious metal trades around $2,950 at the time of writing on Thursday.

Meanwhile, traders are still trying to oversee the amount of geopolitical headlines taking place. US President Donald Trump commented on Wednesday that the US will impose reciprocal tariffs on Europe coming into effect on April 2. On the other hand, US diplomats are on their way to Russia to negotiate a ceasefire deal that already got support from Ukraine and bears US military support for the country. 

Daily digest market movers: Does that add up?

• US Consumer Price Index figures for February rose at the slowest pace in four months, and traders are fully pricing in another quarter-point interest-rate cut by the Federal Reserve in June’s meeting. Lower borrowing costs tend to benefit Gold, as the precious metal doesn’t pay interest, Bloomberg reports. 
• Gold is set to push to a record above $3,100 in the second quarter of 2025 on rising economic uncertainty due to US President Donald Trump’s tariff policies, according to BNP Paribas SA, Reuters reports. 
•  A worsening US budget outlook is signaling inflation could increase, which would benefit Gold as a hedge, according to Macquarie Bank, which calls for a $3,500 level by the third quarter of 2025, Bloomberg reports.  
• The CME Fedwatch Tool sees a 97.0% chance for no interest rate changes in the upcoming Fed meeting on March 19. The chances of a rate cut at the May 7 meeting currently stand at 39.5%. 

FXStreet