Gold prices remained steady near a record high on Tuesday, February 25, as concerns over US President Donald Trump’s tariff plans fueled demand for the precious metal. Investors turned to gold as a safe-haven asset amid fears that Trump’s tariffs could trigger inflation and escalate global trade tensions.
Spot gold was little changed at $2,949.46 per ounce, just $7 shy of the all-time high of $2,956.15 reached in the previous session. US gold futures were also steady, trading at $2,965.
Trump’s Tariff Plans and Inflation Concerns
On Monday, President Trump confirmed that tariffs on imports from Canada and Mexico are “on time and on schedule,” despite efforts by both countries to enhance border security and curb the flow of fentanyl into the US. These tariffs, set to take effect on March 4, have raised concerns that they could exacerbate inflation.
As the situation unfolds, economists and investors expect the US Federal Reserve to react to changes in inflation and the labor market. Research by the San Francisco Federal Reserve published on Monday indicated that the Fed is likely to respond “strongly and systematically” to these developments.
The Fed’s Interest Rate Path and Gold’s Appeal
Traders are closely monitoring the Federal Reserve’s interest rate decisions for clues about how it will manage inflation. Trump’s tariff policies are viewed as inflationary, which could pressure the Fed to maintain higher interest rates for longer periods. If inflation rises significantly, gold’s appeal as a non-yielding asset could diminish, as higher interest rates typically reduce the demand for gold.
Investors are also awaiting the release of the US Personal Consumption Expenditures (PCE) report on Friday, which is the Fed’s preferred measure of inflation.
Geopolitical Tensions and Gold Demand
Geopolitical tensions also contributed to gold’s steady performance. President Trump’s recent disagreements with French President Emmanuel Macron over the handling of the Ukraine conflict highlighted a growing divide between the United States and Europe. Trump’s push for a quick ceasefire deal with Russia has created additional uncertainties, further supporting demand for safe-haven assets like gold.
India’s Gold Imports Decline
On the supply side, India’s gold imports are expected to fall 85% in February compared to the same period last year, marking the lowest level in 20 years. The sharp decline in imports is attributed to record gold prices, which have dampened demand in the world’s second-largest consumer of gold.
Other Precious Metals
In other precious metals, silver, platinum, and palladium also saw slight declines. Spot silver dropped 0.3% to $32.27 per ounce, platinum fell 0.3% to $963.35, and palladium was down 0.3% at $937.27.
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