Gold hovers near historic highs before US inflation data
Gold prices rose in European trade on Thursday on track for the second straight profit, thus approaching a record high on strong haven demand as the US-China trade war deteriorated.
As the odds of a Fed 0.25% interest rate cut in May faded, investors are now waiting for important US inflation data later today to gather more clues.
Prices
Gold prices rose 1.65% today to $3132 an ounce, with a session-low at $3071.
On Wednesday, gold rose 3.35%, the first profit in five days, and the largest since October 2023 on concerns about the US-China trade war.
The precious metal hit a record high on April 3 at $3167 an ounce before entering a correction in the short term.
Erupting Trade War
US President Donald Trump escalated the devastating trade war with China by announcing 125% tariffs on Chinese products.
The tariffs will be immediate and are a response to China's disrespect to global markets as Trump described it.
Simultaneously, Trump announced a 90-day hold on tariffs for most other countries .
The Chinese government announced fresh retaliatory 84% tariffs on US products, deepening the trade war.
US Rates
Separately, the Federal Open Market Committee’s meeting minutes showed all members unanimously voted in favor of maintaining interest rates unchanged in March.
The minutes showed concerns about weaker growth due to higher tariffs, but increased spending in some economies reduced such concerns.
Policymakers believe that high inflation could be more resistant than expected, with mounting market uncertainty due to weaker consumer spending and high tariffs.
US Inflation Data
Later today, US consumer prices will be released, expected to show a slowdown to 2.5% in March from a 2.8% rise in February, while core prices are expected up 3.0% last month.
SPDR
Gold holdings at the SPDR Gold Trust rose 11.17 tons yesterday to a total of 937.09 tons, the highest since June 2023.
Sterling extends recovery as US pauses tariffs
Sterling rallied in European trade on Thursday against a basket of major rivals, expanding the gains for the third straight session against the dollar and moving away from five-week lows as the risk appetite rebounded after the US paused most tariffs for 90 days.
The odds of a Bank of England interest rate cut in May declined as recessionary risks receded, with traders now awaiting important UK data to gather more clues.
The Price
GBP/USD price rose 0.3% today to $1.2862, with a session-low at $12810.
The pound rose 0.45% on Wednesday against the dollar, marking the second profit in a row and moving away from five-week lows at $1.2708.
Positive Sentiment
The risk sentiment rallied in the market after US President Donald Trump paused reciprocal tariffs on most countries for 90 days.
It led to historic surges in global stock exchanges, including on Wall Street, in Europe and Japan as investors pick up bargain stocks with cheap prices.
UK Tariffs
US President Trump imposed 10% tariffs on UK imports starting April 2025, with this tariff holding as both sides negotiate trade terms in the next three months.
UK Prime Minister Keir Starmer said his government will deal with the crisis “calmly” with a focus on reaching a trade deal that protects British interests.
UK Treasury Secretary Scott Bessent expressed hopes on reaching deals with countries such as Britain before the tariff pause is lifted in July 2025.
UK Rates
As recession concerns declined, the odds of a Bank of England 0.25% interest rate cut at the May meeting slid from 75% to 55%.
Aussie moves in positive zone as Trump pauses most tariffs
The Australian dollar rose in Asian trade on Thursday against its US counterpart for the second straight session as it recovers from five-year lows on activer short-covering.
It comes amid strong positive sentiment with global stocks rebounding after US President Donald Trump froze most tariffs on other countries.
Markets are now hoping for better tariff terms that would avoid destructive results and recession, with the pressure on global central banks receding as well.
The Price
The AUD/USD price rose 0.4% to $0.6178, with a session-low at $0.6116.
The pair rallied 3.3% on Wednesday, the first profit in four days, and the biggest one day profit since May 2010.
US Pauses Tariffs
In a stunning reversal, US President Trump paused reciprocal tariffs on dozens of countries for 90 days.
US Treasury Secretary Bessent described the step as a “strategic victory” for Trump, while managing to bolster his negotiating stance against other countries.
Bessent revealed plans to conduct talks with officials from Vietnam, Japan, India, and South Korea, and he expected these countries to provide “the best deals” for the US.
Global Markets
Global markets registered gigantic gains after the pause in tariffs, with S&P 500 rallying 9.5%, marking its best profit since 2008, while Dow Jones rose 3000 points, as NASDAQ gained over 2000 points.
Australian Rates
As recession concerns declined, the odds of a Reserve Bank of Australia 0.25% rate cut in May 2025 fell from 90% to 60%.
Dow Jones surges 3000 points, marking record daily profit, as NASDAQ rallies 12%
US stock indices spiked and achieved historic gains after US President Donald Trump calmed the markets somewhat on the trade war.
US President Donald Trump escalated the devastating trade war with China by announcing 125% tariffs on Chinese products.
The tariffs will be immediate and are a response to China's disrespect to global markets as Trump described it.
Simultaneously, Trump announced a 90-day hold on tariffs for most other countries .
The Chinese government announced fresh retaliatory 84% tariffs on US products, deepening the trade war.
Separately, the Federal Open Market Committee’s meeting minutes showed all members unanimously voted in favor of maintaining interest rates unchanged in March.
The minutes showed concerns about weaker growth due to higher tariffs, but increased spending in some economies reduced such concerns.
Policymakers believe that high inflation could be more resistant than expected, with mounting market uncertainty due to weaker consumer spending and high tariffs.
On trading, Dow Jones closed up 7.9%, or 2963 points to 40,698 points, achieving its biggest daily profit ever.
S&P 500 rallied 9.5%, or 474 points to 5457 points.
NASDAQ spiked 12.2%, or 1857 points to 17,125 points, its biggest daily profit since 2008.