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Gold prices climbed in Asian trading on Thursday, supported by weaker-than-expected U.S. inflation data, which reinforced expectations of interest rate cuts by the Federal Reserve.
Spot gold rose 0.4% to $2,945.18 per ounce, while gold futures for April delivery edged 0.2% higher to $2,953.62 per ounce as of 00:56 ET (04:56 GMT).
Inflation Eases, Strengthening Gold’s Appeal
The U.S. Consumer Price Index (CPI) for February increased 0.2% month-over-month, translating to an annual gain of 2.8%—slightly below the expected 2.9% and cooling from 3.0% in January.
This slower inflation growth has fueled speculation that the Fed may lower interest rates sooner than expected, with markets now pricing in three rate cuts in 2025, starting in June, according to the FedWatch tool.
Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, increasing its attractiveness to investors.
The Federal Reserve is set to meet on March 18-19, where policymakers will assess the latest inflation data and its impact on monetary policy.
Trump’s Tariff Threats Add to Market Uncertainty
Further escalations in trade tensions between the U.S. and its partners have bolstered demand for safe-haven assets like gold.
On Wednesday, President Donald Trump threatened new tariffs on European Union (EU) goods in response to the EU’s planned countermeasures against U.S. tariffs.
This comes after the U.S. imposed a 25% tariff on steel and aluminum imports, prompting Canada to respond with $21 billion in retaliatory tariffs on U.S. exports.
Market Impact
The U.S. Dollar Index remained near its four-month low, weighed down by recession concerns.
Meanwhile, other precious metals were weaker:
- Platinum futures fell 0.7% to $990.10 per ounce
- Silver futures dipped 0.4% to $33.593 per ounce
Investors remain focused on upcoming U.S. inflation data and Federal Reserve signals, which could further influence gold’s trajectory in the coming months.
