Gold takes a breather after record run on trade war fears
NEW YORK (February 11) Gold prices slipped on Tuesday as investors booked profits following a record high, yet remained bullish amid fears of a global trade war spurred by U.S. President Donald Trump's new tariffs.
Spot gold fell 0.1% to $2,904.87 per ounce, as of 01:41 p.m. ET (1841 GMT), after hitting a peak of $2,942.70 earlier in the session.
U.S. gold futures settled 0.1% lower at $2,932.60.
"Just seeing some profit-taking from the shorter-term futures traders... the market's becoming a bit overextended and just due for some downside corrective pressure and some chart consolidation," said Jim Wyckoff, a senior market analyst at Kitco Metals.
Trump substantially raised tariffs on steel and aluminium imports to a flat 25% "without exceptions or exemptions" in a move he hopes will aid struggling industries in the United States, but which also risks sparking a multi-front trade war.
Traders are keeping an eye on Wednesday's U.S. inflation data for fresh clues on the interest rate outlook in the world's largest economy.
Production at Krastsvetmet precious metals plant in Krasnoyarsk
A view shows an ingot of 99.99 percent pure gold in a workroom during production at Krastsvetmet precious metals plant in the Siberian city of Krasnoyarsk, Russia, May 23, 2024. REUTERS/Alexander Manzyuk/File Photo Purchase Licensing Rights.
A Reuters poll showed the Federal Reserve was expected to wait until the next quarter before cutting rates again. Tariffs could fuel U.S. inflation and postpone rate cuts.
Fed Chair Jerome Powell said the central bank is not in a rush to cut interest rates given an economy that is "strong overall" and inflation that remains above its 2% target.
Powell's comments were part of his opening remarks prepared for delivery at a Senate Banking Committee hearing.
"Higher-than-expected inflation readings could extend the rate pause by the Fed, which could cause gold's performance to moderate in the short term," said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.
Bullion is considered a hedge against inflation, but higher interest rates dampen the non-yielding asset's appeal.
Given any new proclamations from President Trump, the potential uncertainty could sustain prices, and profit-taking scenarios, like today's, might be seen by bullish traders as a buying opportunity during a price dip, Wyckoff said.
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