Gold firms as tariff uncertainty, cooler inflation data lend support

Gold prices edged higher on Thursday as uncertainty over tariffs persisted, driving safe-haven demand, while a cooler-than-expected U.S. inflation print also supported bullion by strengthening expectations of rate cuts.

FUNDAMENTALS

* Spot gold was up 0.2% at $2,938.24 an ounce, as of 0050 GMT, while U.S. gold futures were steady at $2,945.70.

* Data showed that the U.S. consumer price index increased less than expected last month, but the improvement is likely temporary against the backdrop of aggressive tariffs on imports that are expected to raise the cost of most goods in the months ahead.

* Lower inflation leaves more room for the U.S. Federal Reserve to cut interest rates, and non-yielding gold thrives in a low-interest rate setting. * Trump early this month triggered a trade war, increasing the tariffs on goods from China to 20% and imposing a new 25% duty on Canadian and Mexican imports, before dialling back and providing a one month exemption for some goods that meet the rules of origin under the U.S.-Mexico-Canada Agreement on trade.
* Trump also reversed course on Tuesday afternoon on a pledge to double tariffs on steel and aluminum from Canada to 50%, hours after announcing the higher tariffs.
* Trump’s tariffs are widely expected to stoke inflation and economic uncertainty, and have prompted gold to reach a record high of $2,956.15 on February 24.
* Gold is seen as a hedge against political risks and inflation.

* Investors now await U.S. Producer Price Index (CPI) data due later in the day to gain further insights into the Fed’s monetary policy.

* Spot silver rose 0.2% to $33.29 an ounce, platinum added 0.2% to $985.18, and palladium gained 0.6% to $954.63.

DATA/EVENTS (GMT) 1230 US Initial Jobless Clm 8 March, w/e 1230 US PPI Machine Manuf’ing Feb 1430 US EIA-Nat Gas Chg Bcf, Nat Gas-EIA Implied Flow 7 Mar.