Gold prices remained near record highs during Friday’s London trading session, bolstered by US President Donald Trump’s delay in implementing reciprocal tariffs, which caused markets to adopt a risk-on attitude. The dollar’s decline following Trump’s decision provided further support for gold, pushing it to around $2,900 per troy ounce.
Despite speculation about potential U.S. intervention to end the Russia-Ukraine conflict, gold demand continued to rise, driven by economic uncertainty and inflation fears. Trump’s hint at possible peace talks between Russia and Ukraine did little to halt gold’s upward momentum. Gold prices have been steadily increasing, with persistent inflation concerns and the Federal Reserve’s stance on interest rates playing a key role. The metal was expected to rise by around 2.5% for the week, marking its seventh consecutive week of gains. Trump’s executive order to examine reciprocal tariffs on major U.S. goods further fueled market uncertainty, pushing demand for safe-haven assets like gold.
Fed Chairman Jerome Powell’s recent statement, confirming that interest rates will likely remain unchanged for an extended period, has also contributed to gold’s rally. While higher U.S. Treasury yields would typically put downward pressure on gold, investors are turning to the metal as a hedge against inflation.
The CME FedWatch tool indicates an increased likelihood that U.S. rates will remain steady through June, further strengthening gold’s position. Additionally, geopolitical tensions, particularly surrounding NATO and Ukraine, have weakened the U.S. dollar, which in turn supports gold prices.
The April deadline for U.S. trading partners to face restrictions on significant U.S. goods has improved market sentiment, providing more time for negotiations with Washington. Trump’s earlier 25% tariffs on steel and aluminum imports have continued to shape market dynamics.
Gold’s breakout from its consolidation phase, which began in October, signals a continuing uptrend, with tariffs on steel and aluminum raising concerns about disruptions to U.S. businesses’ supply chains.
Despite broader geopolitical uncertainty, strong central bank demand and expectations of a potential rate cut from the Federal Reserve suggest that gold will remain well-supported in the long term, with key targets now surpassing $3,000 per ounce.
