Gold Prices Soar to Record High Amid CPI Data Concerns

Gold prices have surged to a record high of $2,941 per ounce, driven by fears of trade wars and geopolitical uncertainty sparked by US President Trump's tariffs on steel and aluminum imports, with spot gold rising by 0.3% to $2,916.37 per ounce.

The tariffs, which include a 25% rate on steel and aluminum imports, have boosted gold's value due to its scarcity, liquidity, and universal usability, making it a desirable haven during times of economic uncertainty. The price of gold has soared in the past during times of uncertainty, including the 2008 housing crisis, the 2011 financial meltdown, and the 2022 global market uncertainty.

Other assets, such as the dollar, have also been affected by Trump's tariffs, with the dollar rising against most of its peers. Shares in Chinese steelmakers have dipped, while futures in iron ore have erased early gains. Asian markets have struggled due to concerns over Trump's next moves. The US gets most of its steel from Canada, followed by Mexico, Brazil, and South Korea, while the US imports roughly a quarter of the steel it uses.

Gold prices rose to 2942 due to trade friction and central banks' gold purchases, but are likely to retrace lower, with support at 2860 and 2792. The US Dollar's strength and higher interest rates could keep gold prices in check. Ongoing global trade uncertainty and central banks' easing monetary policies support gold prices.

The increase in gold prices has been attributed to concerns over potential tariffs on gold imports, following US President Donald Trump's announcement of a 25% tariff on steel and aluminum imports, leading to a rush to import gold and sparking fears of a trade war.