Gold Holds 0.50% Gain As US Officials Meet Russian Officials In Moscow
Gold (XAU/USD) prices are nearing $2,950 and have good hopes of hitting a new high after the US Consumer Price Index (CPI) data came out lower than expected on Wednesday, which sparked relief in the US market with the chances of a recession or stagflation decreasing. This in turn led to outflows from US Treasuries and inflows from US equities, with the sell-off in Treasuries fueling a rise in yields. The precious metal is trading around $2,950 at the time of writing on Thursday.
Meanwhile, traders are still trying to keep an eye on the number of geopolitical headlines that are happening. US President Donald Trump commented on Wednesday that the US will impose reciprocal tariffs on Europe that will take effect on April 2. On the other hand, US diplomats had just arrived in Russia at the time or wrote to negotiate a ceasefire deal that has won support from Ukraine and brings US military support to the country.
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The U.S. Consumer Price Index rose at its slowest pace in four months in February, with traders fully pricing in another quarter-point interest rate cut by the Federal Reserve at its June meeting. Lower borrowing costs tend to benefit Gold, as the precious metal doesn’t pay interest, Bloomberg reported.
Gold is set to hit a record above $3,100 in the second quarter of 2025 as economic uncertainty over U.S. President Donald Trump’s tariff policies grows, according to BNP Paribas SA, Reuters reported. A worsening U.S. budget outlook suggests inflation could pick up, which would benefit Gold as a hedge, according to Macquarie Bank, which is calling for $3,500 by the third quarter of 2025, Bloomberg reported.
The CME Fedwatch Tool sees a 97.0% chance of no rate change at the Fed’s next meeting on March 19. The odds of a rate cut at the May 7 meeting are currently at 39.5%. (Newsmaker23)
Source: FXsteet
