Gold price is retreating from fresh all-time highs of $3,220 in early Europe on Friday. The US Dollar downward spiral and escalating trade war between the United States and China continue to underpin the safe-haven appeal of Gold price. US PPI inflation data and tariff updates remain on tap.
Mounting concerns over the financial stability and the economic situation in the United States (US) have accelerated the selling interest around the US Dollar (USD), pushing Gold price for another ride higher.
The US Federal Reserve's (Fed) independence has always been under threat, and on April 9 US Supreme Court Chief Justice John Roberts reversed a court ruling, temporarily allowing US President Donald Trump's Administration to fire members of independent agencies. Trump could take this opportunity to fire Fed Chair Jerome Powell, raising concerns over the financial stability in the world's largest economy.
At the same time, US recession fears aggravate amid deepening US-China trade war, hinting at aggressive Fed interest rate cuts starting as early as May. President Trump hiked tariffs on Chinese goods to 145%, the White House confirmed on Thursday. China retaliated with 84% tariffs and strengthened ties with Europe and Asia to ease the pressure.
Exacerbating the pain in the Greenback, the US March Consumer Price Index (CPI) inflation came in tamer-than-expected, although it did not show the full impact of the trade war. The US CPI rose 0.1% in March, putting the 12-month inflation rate at 2.4%, down from 2.8% in February. Following the inflation report, traders continued pricing in three or four cuts by the end of the year.
Looking ahead, the US Producer Price Index (PPI) and preliminary University of Michigan (UoM) Inflation Expectations data will be published. However, the data could play second fiddle to tariff talks. A profit-taking recovery rally in the US Dollar cannot be ruled out due to the end-of-the-week repositioning, which could check the Gold price upside. China's response to Trump's 145% tariffs is eagerly awaited.
Source: Fxstreet
