By Dr Salem Alremeithi CEO of SHR Capital Limited
Gold prices experienced a modest decline for the second consecutive day after reaching historic highs earlier this week.
This downward movement came in response to the Federal Reserve’s assessment that the economy remains robust, indicating no urgency to implement interest rate cuts.
However, the Fed maintains readiness to adjust rates should inflation decrease or employment conditions deteriorate.
Market attention has now shifted to today’s Consumer Price Index (CPI) report and tomorrow’s Producer Price Index (PPI) data.
These crucial economic indicators could potentially exert downward pressure on gold prices if inflation figures exceed expectations, as this would likely reduce the probability of rate cuts this year and strengthen both the U.S. dollar and Treasury yields.
Nevertheless, gold’s upward trajectory continues to find support from increased safe-haven demand, particularly following President Trump’s announcement of aggressive tariff measures.
The prospect of additional trade levies has heightened concerns about a potential trade war, further bolstering gold’s appeal as a safe-haven asset. Furthermore, escalating geopolitical tensions have provided additional support for gold prices, notably Israel’s recent warning about terminating the Gaza ceasefire.
The precious metal’s positive outlook is additionally reinforced by the accommodative monetary policies adopted by major central banks worldwide, coupled with their sustained gold-purchasing activities.
