Gold Rebounds as Traders Weigh Trade War, Interest-Rate Path
Gold rebounded following its steepest one-day loss this year as traders weighed the impacts of US President Donald Trump’s trade war on the future path for interest rates.
In a Thursday interview with Bloomberg Television, Federal Reserve Governor Christopher Waller said companies may begin laying off more workers if aggressive tariff levels are reinstated, and he’d support rate cuts in that scenario to protect the jobs market. Meanwhile, Fed Bank of Cleveland President Beth Hammack told CNBC the US central bank could move on rates as early as June if it has clear evidence of the economy’s direction.
Traders are betting that the Fed could cut rates sooner than anticipated to prevent a recession due to Trump’s trade war. That’s positive for bullion as it pays no interest.
A bullish outlook for gold is underpinned by the Fed’s apparent readiness to ease policy and concerns that the US may face challenges in funding its debt under America’s new tariff regime, said Bart Melek, global head of commodity strategy at TD Securities.
Gold has had a volatile ride this week, initially hitting a record high above $3,500 an ounce on Tuesday, before posting a two-day slump. The initial run-up was driven by Trump’s harsh trade position on China, as well as remarks attacking the Fed. The reversal followed an about-face from the president.
Gold rose 1.1% to $3,323.50 an ounce at 11:45 a.m. in New York, after earlier climbing as much as 2.4% in the session. The Bloomberg Dollar Spot Index fell 0.2%. Silver slipped while platinum and palladium advanced.
Source: Bloomberg
