Last week, Xau/USD was $2,984.91, up $75.36 or +2.59%.
Stock market volatility and trade uncertainty drive gold purchases
Gold's rally was supported by growing concerns about US trade policy. President Trump's new tariff measures, particularly on Chinese imports, have sparked fear of long-term economic tensions. Retaliation tariffs from China and Canada added to market instability, resulting in lower stocks and increased demand for gold as a hedge.
The S&P 500 and Nasdaq discovered deep losses at the beginning of the week, with $5 trillion being wiped out of market value over three weeks. This risk-off move led investors to win gold. This is a trend strengthened by a Bank of America survey showing that 52% of fund managers currently view it as the best protection against the trade war.
Cooling inflation strengthens rate reduction bets
This week's inflation report supported expectations that the Fed could cut prices later this year. CPI data showed an increase of 0.3% in February, with annual inflation rate of 2.9%. The CORE CPI slowed to 3.2%, but the PPI was softer than expected, and price pressure was eased.
Traders have set a price for potential Fed easing by the middle of the year, but Fed Chairman Jerome Powell remains uncommitted. As inflation continues to decline, cases of interest rate reductions will be strengthened. This is bullish for money. However, if inflation stabilizes above the target, the Fed can hold gold profits for a long time and limit the benefits of gold.
Equity rebound on Friday will cause gold profits
Gold retreated from its peak as stocks recovered sharply on Friday. DOW increased by 1.65%, while the S&P 500 rose by 2.13%, mitigating risk aversion. The lack of new tariff headlines and rebounds in tech stocks have encouraged investors to return to stocks, causing mild profits in gold.
