Gold prices climbed 0.8% to $2,912.88 per ounce on Tuesday, recovering from Monday’s lows as investors moved toward safe-haven assets amid growing trade tensions.
Attention now turns to Wednesday’s U.S. inflation report, a key data point that could shape the Federal Reserve’s interest rate outlook. Traders and portfolio managers are watching closely because stronger-than-expected inflation could prompt the Fed to maintain or raise rates, while weaker figures might increase the likelihood of rate cuts.
Recent shifts in U.S. trade policy have added to market uncertainty. Announcements of tariffs affecting Canada, Mexico and China have prompted retaliatory measures from those countries and amplified concerns about slower global growth. That uncertainty has supported demand for gold as a store of value.
However, gold’s role as an inflation hedge is nuanced. Because gold does not earn interest, persistently high real interest rates—when nominal rates outpace inflation—can reduce the metal’s attractiveness compared with yield-bearing assets. Conversely, if inflation expectations rise while real rates stay low or decline, gold may regain some of its appeal.
In summary, the interplay between incoming inflation data, central bank policy decisions and ongoing trade developments will likely determine near-term momentum for gold markets.