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Trade Uncertainty Supports Gold
Market sentiment remains cautious as US trade policies continue to create uncertainty. President Donald Trump’s shifting stance on tariffs—imposing and then delaying duties on Canada and Mexico while increasing tariffs on Chinese goods—has unsettled global markets. China and Canada have retaliated with tariffs of their own, adding to economic uncertainty.
Trump also declined to predict whether the US economy could enter a recession, further fueling investor concerns. Treasury Secretary Scott Bessent described the current economic phase as a “detox period” due to federal spending cuts, while some analysts question the likelihood of a downturn. This mixed outlook has kept gold supported as investors seek safety in volatile market conditions.
Fed Rate Cut Expectations and Inflation Data in Focus
The latest New York Fed survey showed consumer inflation expectations rising slightly, with one-year inflation projected at 3.1%, up from January’s 3%. Market participants are now pricing in a possible rate cut in June, which could provide further support for gold. However, if inflation remains persistently high, the Fed may be forced to maintain higher interest rates, which would limit gold’s upside as it yields no interest.
Investors are now awaiting Wednesday’s Consumer Price Index (CPI) report, which is expected to show a slowdown in inflation. A softer reading could increase expectations of Fed easing, boosting gold demand, while a stronger-than-expected number may pressure prices lower. The Producer Price Index (PPI) data on Thursday will also provide further insights into inflation trends.
Bond Yields and Recession Concerns
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