Gold climbs above $3000 for first time in history
Gold prices rose in European trade on Friday on track for the fourth straight profit, hitting a new record high above $3000.
The precious metal is on track for the largest weekly profit in 2025 on strong haven demand amid concerns about the global trade war, and with increasing odds of a Fed rate cut in June.
Prices
Gold prices rose 0.45% to $3001 an ounce, the highest on record, with a session-low at $2980.
On Thursday, gold rose 1.9%, the third profit in a row, marking the best profit in 2025 on haven demand.
Weekly Trades
Gold is up over 3% so far this week, on track for the second weekly profit in a row and the largest this year.
Trade Tensions
US President Donald Trump announced plans to escalate the global trade war through additional tariffs on European commodities.
The threat comes after Trump already imposed 25% tariffs on all steel and aluminum imports, triggering strong reactions from all major US partners.
European Commission President Ursula Von der Leyen announced plans to retaliate on a variety of US products starting April 2025, including bourbon and Harley Davidson products.
Trump reiterated his threats of reciprocal tariffs on the EU for any tariffs they announce.
US Rates
Recent data showed US consumer prices slowed down more than expected, bolstering the odds of a Fed rate cut in the summer.
According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in March stood at just 3%.
However, the odds of such a cut in June are much higher at 80%.
SPDR
Gold holdings at the SPDR Gold Trust rose 7.17 tons yesterday to a total of 905.81 tons, the highest since February 27.
Euro under pressure on mounting trade tensions
The euro fell in European trade on Friday against a basket of major rivals, extending losses for the third straight session against the dollar and moving away from a five-month high on profit-taking.
Euro faces negative pressures due to mounting EU-US trade tensions, following reciprocal tariffs with Donald Trump threatening even more duties on EU products.
The Price
The EUR/USD fell 0.2% today to $1.0830, with a session-high at $1.0858.
The pair fell 0.35% on Thursday on profit-taking away from five-month highs at $1.0947.
The pair was hurt by Donald Trump’s threats of even more tariffs on European products soon.
Trade Tensions
US President Donald Trump announced plans to escalate the global trade war through imposing additional tariffs on European commodities.
The threat comes after Trump already imposed 25% tariffs on all steel and aluminum imports, triggering strong reactions from all major US partners.
European Commission President Ursula Von der Leyen announced plans to retaliate on a variety of US products starting April 2025, including bourbon and Harley Davidson products.
Trump reiterated his threats of reciprocal tariffs on the EU for any tariffs they announce.
Lagarde
European Central Bank President Christine Lagarde cautioned that the eurozone is exposed to exceptional shocks due to the trade war, military conditions, and climate issues, threatening increasing inflation.
Yen hovers near one-week trough on BOJ concerns
The Japanese yen fell in Asian trade on Friday against a basket of major rivals, trading near a week low against the dollar and on track for a weekly loss amid growing concerns by the Bank of Japan towards mounting outside risks.
The BOJ is meeting next week to discuss monetary policies, expected to hold interest rates unchanged.
The Price
The USD/JPY rose 0.55% to 148.59 yen per dollar, with a session-low at 147.69 yen.
The yen rose 0.3% on Wednesday against the dollar, the first profit in three days away from a week low at 149.19.
Weekly Trades
The yen is down 0.5% so far this week against the dollar on track for the second weekly loss in the past three weeks.
BOJ
The Bank of Japan is convening next week to discuss suitable monetary policies, widely expected to hold rates steady at 0.5%.
BOJ policymakers are expected to discuss the risks of the mounting US trade war on the export-oriented Japanese economy, which will determine the timing of the next rate hike.
Concerns about a global recession due to Donald Trump’s trade wars are casting shadows on Japanese wages and inflation data, which showed progress towards the 2% BOJ target.
As investors expect no change in policies next week, the markets will be focused on BOJ Governor Kazuo Ueda post-meeting remarks, looking for clues about the potential impact of the worsening global outlook on the path ahead of Japanese interest rates.
A BOJ source told Reuters that the central bank believes the Japanese economy is on the right track but outside risks have increased, which might impact the timing of the next rate hike.