Gold inches up on trade war fears, inflation data on tap

GOLD prices edged up on Thursday (Feb 13), as markets tracked developments in US President Donald Trump’s tariff plans, which could ignite a global trade war, while investors awaited US inflation data due later in the day.

Spot gold rose 0.1 per cent to US$2,905.12 per ounce as at 0024 GMT, after prices dropped more than 1 per cent following the release of the US consumer price index in the previous session. Bullion hit a record peak of US$2,942.70 on Tuesday.

US gold futures were steady at US$2,929.60.

The US consumer price index increased more than expected in January, reinforcing the Federal Reserve’s message that it was in no rush to resume cutting interest rates amid growing uncertainty over the economy.

Chair Jerome Powell told the House Financial Services Committee that the data was further evidence that the Fed’s battle with rising prices was not finished, and meant any further rate cuts would have to wait until it is clear inflation will return to the Fed’s 2 per cent target.

Bullion is considered a hedge against inflation, but higher interest rates dampen the non-yielding asset’s appeal.

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Trump on Wednesday said he would impose reciprocal tariffs as soon as Wednesday evening on every country that charges duties on US imports, in a move that ratchets up fears of a widening global trade war and threatens to accelerate US inflation.

Investors are closely watching for the producer price index data due later in the day for further insights on monetary policy.

Spot silver rose 0.1 per cent to US$32.26 per ounce, platinum was steady at US$992.32 and palladium firmed 0.2 per cent to US$975.48. REUTERS