Trade uncertainty supports gold
Market sentiment remains cautious because American trade policy continues to create uncertainty. President Donald Trump’s shifting attitude towards rates – adjusting and then postponing tasks on Canada and Mexico, while raising the rates for Chinese goods – has the world markets restless. China and Canada have taken revenge with their own rates, which contribute to economic uncertainty.
Trump also refused to predict whether the American economy could enter into a recession, so that the concern of investors was further fueled. Treasury Secretary Scott Bessent described the current economic phase as a “detox period” due to cutbacks on federal editions, while some analysts question the chance of a decline. These mixed prospects have supported gold because investors are looking for safety in volatile market conditions.
Fed Rate reduced expectations and inflation data in Focus
The latest study by the New York FED survey showed that the expectations of consumer inflation somewhat increased, with a year of inflation projected at 3.1%, an increase compared to 3%of January. Market participants now praise in a possible rate reduction in June, which can further support gold. However, if inflation remains high, the FED can be forced to maintain higher interest rates, which would limit the benefit of Gold because it does not result in interest.
Investors are now waiting for the Wednesday Consumer Price Index (CPI) report, which is expected to demonstrate a delay in inflation. A softer reading can increase the expectations of relaxing the fed, stimulating the gold demand, while a stronger than expected number can put pressure on prices. The data from the producer Price Index (PPI) on Thursday will also offer further insights into inflation trends.