Gold clings to daily gains and trades near the record-high it set above $3,080 earlier in the day. Although the data from the US showed that core PCE inflation rose at a stronger pace than expected in February, it failed to boost the USD.
The anti-risk flow is evident from a generally weaker tone around the equity markets, which, in turn, is seen driving safe-haven flows toward the precious metal. The global risk sentiment continues to be undermined by worries over US President Donald Trump's auto tariffs announced on Wednesday, the uncertainty about impending reciprocal tariffs next week, and their effect on the global economy.
Furthermore, bets that the Federal Reserve (Fed) will resume its rate-cutting cycle soon, on the back of concerns that Trump's trade policies will dent US growth, turns out to be another factor underpinning the non-yielding Gold price. Meanwhile, the US Dollar (USD) attracts some buyers following the overnight pullback from a multi-week top amid some repositioning trade ahead of the US Personal Consumption Expenditure (PCE) Price Index, due for release later today. This, however, does little to undermine demand for the XAU/USD pair or hinder the ongoing move up.
US President Donald Trump on Wednesday announced a 25% tariff on imported cars and light trucks set to take effect on April 3, widening the global trade war and tempering investors' appetite for riskier assets.
This comes on top of a flat 25% tariff on steel and aluminum, and Trump's impending reciprocal tariff announcement next week, which fuels uncertainty and lifts the safe-haven Gold price to a fresh record high.
Meanwhile, the markets are now pricing in the possibility that the Federal Reserve (Fed) would lower borrowing costs again at its June policy meeting amid worries about the tariffs-driven US economic slowdown.
The US Dollar bulls seem rather unaffected by better-than-expected US macro data released on Thursday and mostly hawkish comments from Fed officials, lending additional support to the XAU/USD pair.
The US Bureau of Economic Analysis (BEA) reported that the US ' Gross Domestic Product (GDP) grew by 2.4% annualized pace in the fourth quarter, above the previous estimate and expected reading of 2.3%
Adding to this, the US Department of Labor said that the number of US citizens filing new applications for unemployment insurance ticked lower to 224K compared to the previous week's revised tally of 225K.
Richmond Fed President Tom Barkin said that the current moderately restrictive monetary policy is right for an environment with an abnormal amount of uncertainty and fast changes in US government policy.
Adding to this, Boston Fed President Susan Collins warned that the Trump administration's aggressive trade policies will drive up US inflation, but it is unclear how persistent that upward pressure will be.
Hence, the focus remains glued to the release of the US Personal Consumption Expenditure (PCE) Price Index, or the Fed's preferred inflation gauge, due later during the early North American session.
Investors will scrutinize the crucial data to gauge the trajectory for further rate cuts, which will influence the USD price dynamics and provide a fresh impetus to the non-yielding yellow metal.
Source: Fxstreet
