Global gold prices rose sharply during Thursday’s trading session and continued their upward trend this morning (Feb 14), as risk-hedging demand increased following President Donald Trump’s announcement of new tariff plans. The weakening U.S. dollar also contributed to pushing gold prices closer to the record high set earlier this week.
At market close in New York, spot gold prices rose $23.9 per ounce (+0.8%) to settle at $2,928.7 per ounce, according to Kitco data.
As of 9 AM Vietnam time, spot gold in Asian markets had increased by $1.1 per ounce (+0.04%) to $2,929.8 per ounce. Based on the USD selling rate at Vietcombank, this price equates to 90.4 million VND per tael, up 200,000 VND per tael compared to yesterday morning.
Trade War Fears Boost Gold Demand
In a memorandum signed on February 13, Trump outlined a roadmap to implement reciprocal tariffs on all countries imposing tariffs on U.S. imports.
Although these new tariffs have not yet taken effect, and U.S. stock markets rallied strongly following the announcement, investors remain concerned about the possibility of a global trade war. Such a trade conflict could disrupt supply chains, drive inflation higher, and hamper economic growth.
As a result, gold continues to serve as a safe-haven investment, with spot gold prices climbing back toward the record high of over $2,940 per ounce reached on Tuesday.
Inflation Data Has Little Impact on Gold Prices
A report from the U.S. Department of Labor released on Thursday showed:
- The Producer Price Index (PPI) rose 0.4% in January, exceeding economists’ 0.3% forecast from a Dow Jones survey.
- Core PPI (excluding energy and food prices) increased by 0.3%, in line with expectations.
However, this inflation data had little impact on gold prices, as the Consumer Price Index (CPI) report released on Wednesday had already confirmed hotter-than-expected inflation, reinforcing the likelihood that the Federal Reserve (Fed) will delay rate cuts until the second half of the year.
“The main factor driving gold prices this session is political uncertainty and its potential economic consequences. The PPI report was fairly neutral and didn’t significantly impact gold prices. Global investors are more concerned about Trump’s trade policies and their effects on the economy.”
– Jeffrey Christian, Fund Manager at CPM Group, told Reuters.
During this week’s Congressional testimony, Fed Chair Jerome Powell reaffirmed that the Fed will not rush to cut interest rates.
U.S. Dollar Weakness Fuels Gold’s Rally
Despite hotter-than-expected inflation data, Powell’s hawkish stance, and Trump’s comments about a potential peace deal between Russia and Ukraine, gold prices continued to rise due to strong safe-haven demand. According to Bob Haberkorn, a strategist at RJO Futures, traders quickly bought gold on any price dips.
On Thursday, gold prices were also supported by a weakening U.S. dollar:
- The Dollar Index (which measures the USD against six major currencies) fell nearly 0.6%, from 107.94 to 107.31.
- This morning, the index continued its decline by more than 0.2%, dropping below 107.1.
According to Reuters, record-high gold prices are dampening jewelry demand in India during the wedding season. Meanwhile, gold shops in China are offering lower prices than global markets to attract buyers.
