Investing.com-- Gold prices hit a record high in Asian trade on Friday, extending recent gains amid heightened safe haven demand after U.S. President Donald Trump imposed steep tariffs on the automobile sector.
Investors were also bracing for a potentially hotter PCE price index reading later in the day. The print is the Federal Reserve’s preferred inflation gauge, and is expected to factor into expectations for future interest rate cuts.
Gold was sitting on bumper gains through March, having benefited from deteriorating risk appetite as markets fretted over Trump’s tariffs and the threat of a U.S. recession. Geopolitical tensions between Russia and Ukraine, as well as a breakdown in the Israel-Hamas ceasefire fueled haven demand.
Spot gold traded up 0.6% at $3,073.79 an ounce by 00:47 ET (04:47 GMT), after hitting a record high of $3,077.67/oz earlier in the day. Gold futures expiring in May jumped 0.7% to $3,112.72/oz after hitting a peak of $3,117.50/oz.
Tariff jitters persist, keep gold uplifted
Trump’s auto tariffs were a main point of support for gold in the past two sessions, with the U.S. President stating that his 25% duties will take effect from April 2.
Trump is set to announce reciprocal tariffs against a host of major U.S. trading partners on the date, with the scope and potential impact of his tariffs being a key point of uncertainty for markets.
Trump has also threatened tariffs against industries such as semiconductors and pharmaceuticals, as well as select commodities.
The U.S. President’s tariff agenda has drawn ire from other countries, with Canada, China, Europe and Mexico all preparing retaliatory measures, marking the start of a global trade war.
This uncertainty factored heavily into demand for gold.
Other precious metals also rose on Friday. Platinum futures inched up to $989.55/oz, while silver futures were an outlier, rising 0.6% to an over 12-year high of $35.283/oz.
Among industrial metals, benchmark copper futures on the London Metal Exchange fell 0.3% to $9,828.80 a ton, while U.S. copper futures fell 0.4% to $5.1015 a pound, retreating from record highs hit earlier this week. U.S. copper prices rallied on expectations that Trump’s tariffs on the red metal will severely crimp copper supplies in the country.
PCE inflation awaited for more rate cues
Markets were now awaiting key PCE price index data for February, which is the Federal Reserve’s preferred inflation gauge, for more cues on the U.S. economy and interest rates.
While consumer and producer inflation readings for the month showed some cooling, components from the two, which factor into PCE inflation, rose through the month. This kept investors largely on edge over a potentially hotter than expected PCE print.
Core PCE inflation is also expected to have risen further above the Fed’s 2% annual target.
Sticky inflation gives the Fed less impetus to cut interest rates, with the central bank having signaled as much during a meeting earlier this month.