Gold prices steady as markets weigh hawkish Fed, Trump tariffs
2025.01.09 00:56
Investing.com– Gold prices steadied in Asian trade on Thursday after logging two straight days of gains, as heightened uncertainty over a hawkish Federal Reserve and President-elect Donald Trump’s plan for trade tariffs fueled some safe haven demand.
Among industrial metals, copper prices firmed as weak inflation data from top importer China spurred bets on more stimulus measures from Beijing.
But metal markets remained under pressure from strength in the dollar, which came back in sight of over two-year highs on hawkish signals from the Fed.
fell 0.1% to $2,660.36 an ounce, while expiring in February rose 0.2% to $2,678.60 an ounce by 00:11 ET (05:11 GMT).
Gold sees some safe haven demand on economic uncertainty
Bullion prices benefited from some safe haven demand this week, as uncertainty over Trump’s trade and immigration policies dented risk appetite.
A CNN report said Trump could declare a national economic emergency to legally justify his plans to impose universal trade tariffs.
Concerns over Trump’s policies also came into focus after the of the Fed’s December meeting showed policymakers expressing some concerns over sticky inflation.
Specifically, Fed officials were growing concerned that Trump’s expansionary and protectionist policies could underpin inflation in the long term.
The minutes also largely reiterated the Fed’s plans to cut interest rates at a slower pace in 2025, after the central bank effectively halved its projected rate cuts to two from four in 2025.
Treasury yields shot up after the Fed’s minutes, as did the dollar.
Higher for longer rates bode poorly for non-yielding assets such as metals, given that they increase the opportunity cost of investing in the sector.
Other precious metals were a mixed bag on Thursday, and also lagged gold in recent sessions. fell 0.1% to $983.75 an ounce, while rose 0.3% to $30.785 an ounce.
Copper rises as weak China inflation fuels stimulus hopes
Benchmark on the London Metal Exchange rose 0.4% to $9,053.50 a ton, while March rose 0.6% to $4.2927 a pound.
Chinese inflation was flat in December, while inflation shrank for a 27th consecutive month, indicating little improvement in disinflation.
Inflation remained weak even as Beijing doled out its most aggressive round of stimulus measures through late-2024.
But Thursday’s inflation data fueled increased bets that Beijing will do more to shore up Chinese growth, especially on the fiscal front.
