Gold prices fell in Asian trade on Friday as the dollar strengthened ahead of a key US inflation report. However, the metal remained on track for modest monthly gains, supported by its safe-haven appeal amid concerns over US tariffs.
How US Inflation Report Impacts Gold Prices
Spot gold was down 0.4% at $2,864.94 an ounce, while April gold futures were down 0.6% at $2,877.80 an ounce by 01:44 ET (06:44 GMT). Despite the decline, gold is on track for a 2% monthly gain as investors await the release of US personal consumption expenditures data, the Federal Reserve’s preferred inflation gauge. Investors are awaiting the data, which could have a major impact on US interest rate trends.
Tariff concerns support gold
Despite the slight pullback in prices, gold continues to find some support from ongoing concerns over global trade tensions. The US dollar index rose 0.1%, making gold more expensive for overseas buyers. However, ongoing trade concerns, particularly regarding Trump’s tariffs, have helped gold maintain its safe-haven status. In this context, ING analysts stressed in a recent note that concerns over the impact of tariffs on inflation are helping to boost demand for gold.
Monthly Gold Outlook
Gold is expected to post a monthly gain of around 2%, as investors await the impact of inflation data on interest rate expectations. Concerns over the escalating trade war between the US and China, which could lead to an escalation in economic conditions, continue to support demand for gold. US President Donald Trump reiterated his plans to impose 25% tariffs on Mexican and Canadian imports, in addition to imposing a 10% tariff on Chinese goods. This, along with the possibility of additional tariffs on European imports, adds to the uncertainty in the markets.
Other Precious Metals Markets
Along with gold, other precious metals were also affected by the strong US dollar. Platinum futures fell 0.4% to $948.55 per ounce, while silver futures lost 1% to $31.495 per ounce. This decline reflects the impact of the strong US dollar on these metals, in addition to the ongoing trade tensions. However, despite this decline, silver and platinum remain under pressure due to the strengthening US dollar.
Copper falls on tariff concerns
On the other hand, copper prices have seen a significant decline due to concerns about the tariff policy announced by Trump. In February, the US president announced the imposition of 25% tariffs on steel and aluminum imports, which is expected to significantly impact industrial metals such as copper. ING analysts wrote that “tariffs are trending downward for industrial metals as global growth slows.” However, there is hope that China will announce stimulus measures to support metal prices. Copper futures on the London Metal Exchange fell 0.7% to $9,354.40 a tonne, while April copper futures fell 1% to $4,549 a pound. Meanwhile, global markets are watching potential Chinese stimulus that could help stem copper price declines.
Silver under pressure as dollar strengthens
Silver (XAG/USD) is also struggling. It traded at $31.23, weighed down by a stronger US dollar and trade policy concerns. The dollar’s strength was supported by positive US economic data and a hawkish Fed. Meanwhile, trade tensions between the US and China continued to escalate, with the US raising tariffs on Chinese goods to 20%.
Despite China’s liquidity measures, including a 300 billion yuan injection via the Medium Term Lending Facility, silver remained under pressure due to a stronger dollar and trade policy implications
Tight Fed stance
- Investors continue to monitor developments in the US-China trade situation and its potential impact on precious metals.
Gold and silver prices were also affected by statements by Atlanta Federal Reserve President Raphael Bousik, who stressed the importance of maintaining high interest rates to control inflation. This statement contributed to strengthening the bearish trend in precious metals, as investors reduced their expectations for interest rate cuts in the near term. This reduced the appeal of non-yielding assets such as gold and silver.
Gold and Silver Forecast for the Near Future
Currently, gold and silver remain in a downtrend amid the strength of the US dollar and rising trade tensions. Monitoring key support levels will be crucial in the coming period. For gold, there is immediate support at $2,839.94, with deeper support at $2,806.69. In the event of a decline below $2,839.94, gold may witness further selling.
For silver, it is currently trading at $31.23, with support at $30.69. If silver falls below this level, it could see further selling pressure. On the other hand, if prices rise above $31.41, this move could signal a potential upside shift.
Gold and silver remain under significant pressure due to several factors, most notably the strength of the US dollar and rising trade tensions. However, there are still supportive factors, such as gold’s safe-haven appeal amid tariff concerns, which could contribute to increased demand for it. However, future price movements will largely depend on the release of US inflation data and the Federal Reserve’s interest rate decisions.
