Trump’s tariff threats stimulate the demand for safe haven
Investor’s fear of potential American rates under President Donald Trump has strengthened Gold’s Safe-Haven-Apparet power. Although it is unlikely that gold itself is confronted with direct rates, risk managers move physical metal as a precaution. This has caused a peak in Exchange-for-Physical (EFP) transactions, which strengthens support on the spot market.
The participants in the London Bullion Market participants climb to borrow gold from central banks to meet the increased demand after an increase in deliveries to New York. Although Trump still has to mention gold in tariff discussions, market participants are opposing uncertainty. Traders are also looking at the step of the White House to impose steep rates on Mexico and Canada, with possible implications for global trade and risk description.
Fed keeps the rates stable, traders are waiting for inflation data
The Federal Reserve chose to keep interest rates unchanged on Wednesday, as generally expected. FED -President Jerome Powell did not indicate an urgency to further reduce the rates, with the emphasis on the need for “real progress on inflation” or weakness of the labor market before any adjustments. The Central Bank remains in a wait-and-see mode, with traders who are now concentrating on the release of the US Personal Consumptions Expenditures (PCE) price index-an important inflation meter that could influence the next Gold step.
Treasury yields fell after the FED decision, whereby the 10-year return reduces 6 basic points to 4.492% and the return of 2 years fell nearly 3 basic points to 4.201%. A long -term period of high interest rates could weigh on gold in the longer term, but for now the uncertainty surrounding inflation and policy of Trump is the demand strongly.
Amazing dollar, but gold remains resilient
The US dollar stated after the FED policy decision, but gold remained well supported. FED officials gave little indication of future tariff reductions, which contributed to dollar strength. However, traders remain careful with the potential economic impact of Trump’s trade policy, which can further feed gold purchase.
Karl Schamotta, main market strategist at CorPay, noted that the position of the Fed seems somewhat unhorted, but that the uncertainty about tax and trade policy remains high. With markets that are awaiting clearer signals on inflation and employment, gold continues to act as a preference against uncertainty.