Gold prices stabilized on Tuesday after experiencing significant fluctuations during Asian trading hours, as investors took profits following the metal’s surge to a new record high. The spike was driven by concerns over the potential for a global trade war following U.S. President Donald Trump’s latest moves.
Spot gold reached an all-time high of $2,942.25 per ounce, marking the eighth time this year that it hit a new peak. However, by 1 p.m. ET, the price retreated to $2,904.54. U.S. gold futures also showed little change, trading flat at $2,932.90 per ounce. Since the start of the year, gold has risen by approximately 11%, driven by Trump’s trade policies and geopolitical tensions, which have reinforced gold’s status as a safe haven in uncertain times.
The precious metal’s surge followed Trump’s announcement of tariffs on U.S. steel and aluminum imports, a move that could trigger a multi-front trade war and further unsettle global markets. Traders are closely watching the potential economic and monetary policy implications of these tariffs, particularly concerning inflation and growth in the U.S.
Federal Reserve Chair Jerome Powell is scheduled to testify before Congress, which could offer insights into the central bank’s monetary policy. Powell has previously stated that the Fed is in no rush to cut interest rates, citing the overall strength of the U.S. economy.
Bloomberg reports that short-term U.S. inflation expectations have outpaced longer-term ones, reaching the widest gap since 2023. This development may suggest that the Fed could slow the pace of rate cuts, a scenario that could dampen gold’s appeal since the metal yields no interest.
“Higher-than-expected inflation readings could prompt the Fed to extend its rate pause, which could lead to a moderation in gold’s performance in the short term,” said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.
Gold’s rise has been accompanied by increased investment in bullion-backed exchange-traded funds (ETFs). Global holdings of these ETFs have increased in six of the past seven weeks, reaching their highest level since November, according to Bloomberg data.
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