Gold holds steady near record high, but US monetary stance dampens market

Gold prices held steady above the $2,900 (R53,563) mark on Thursday after two days of mild losses that followed Tuesday’s record high.

Bullion’s status as an investment safe haven has been reinforced this year in the wake of Donald Trump’s disruptive geopolitical moves, with prices surging by around 11% since January.

Gold’s upward trajectory continues to find support from increased safe haven demand, particularly in light of Trump’s aggressive tariff measures, said Dr Salem Alremeithi, CEO of SHR Capital Limited.

“The prospect of additional trade levies has heightened concerns about a potential trade war, further bolstering gold's appeal as a safe-haven asset. Furthermore, escalating geopolitical tensions have provided additional support for gold prices, notably Israel's recent warning about terminating the Gaza ceasefire,” Alremeithi said.

He added that the precious metal’s positive outlook is additionally reinforced by the accommodating monetary policies adopted by major central banks around the world, coupled with their sustained gold-purchasing activities.

However, the US Federal Reserve’s hawkish monetary policy stance is currently keeping gold from building on the highs seen earlier this week. This was reinforced by the US Consumer Price Index numbers released on Wednesday, which showed annual inflation was running higher than expected at 3.0%.

Gold prices sagged on Wednesday after the Fed indicated that it saw no urgency in cutting rates as the US economy remains robust. 

“However, the Fed maintains readiness to adjust rates should inflation decrease or employment conditions deteriorate,” Alremeithi.

Trump has however called for lower interest rates.

“Interest Rates should be lowered, something which would go hand in hand with upcoming Tariffs!!! Lets Rock and Roll, America!!!” he wrote on his social media platform Truth.

However, RSM’s US Chief Economist Joseph Brusuelas stated that he now only expects the Fed to slash rates once this year, and likely only in December, NBC News reported.

IOL