Gold (XAU/USD) held firm around $3,215 on Friday after briefly reaching a historic high of $3,219 during Asian trading, bolstered by a weakening U.S. Dollar and mounting trade tensions between the United States and China. The precious metal, often sought as a safe haven in times of geopolitical and economic uncertainty, remains in demand as investors weigh global risks.
Fresh data from the U.S. Bureau of Labor Statistics released Thursday showed that U.S. consumer prices unexpectedly declined in March. Headline inflation dropped to 2.4% year-over-year, down from 2.8% in February and below the forecasted 2.6%. Core inflation, which excludes food and energy, also slowed to 2.8% annually—softer than the 3.0% market expectation and down from the previous 3.1%. On a monthly basis, headline CPI slipped by 0.1%, while core CPI rose by just 0.1%.
Despite the easing inflation, risks remain tilted to the upside following President Donald Trump’s announcement of a 125% tariff hike on Chinese imports—an immediate escalation after China pledged to retaliate with 84% duties. Although Trump concurrently moved to temporarily reduce tariffs on a range of other nations, the renewed U.S.-China tariff battle continues to rattle markets and drive investors toward safer assets like gold.
“Gold regains its safe-haven appeal and gets back on track for new all-time highs,” said Nikos Tzabouras, Senior Market Analyst at Tradu.com.
However, gold’s upside may be capped by shifting expectations around U.S. Federal Reserve policy. While recent inflation data supports the case for rate cuts, some investors are paring back aggressive Fed easing bets. Markets are now pricing in a potential rate cut in June and forecasting up to a full percentage point reduction by year-end. A more hawkish Fed outlook could support the U.S. Dollar and weigh on gold, which is priced in USD.
