Gold prices trade near record levels on hopes of rate cut, tariff jitters

Gold prices traded near record high levels on Thursday, fuelled by demand for safe-haven assets amid tariff concerns and a US inflation report that reinforced expectations of a future rate cut.

Spot gold gained 0.3 per cent to $2,940.99 an ounce, as of 0856 GMT, about $16 shy from the record peak. Due to the economic uncertainty caused by US tariffs, spot gold hit a record high of $2,956.15 on February 24.

US gold futures were up 0.1 per cent at $2,950.80.

"Gold continues to be supported by the prospect of a tariff-driven economic slowdown, potentially bringing forward US Fed rate cut expectations," Ole Hansen, head of commodity strategy at Saxo Bank, said.

"I maintain my bullish stance on gold, expecting an economic slowdown or even stagflation to drive demand and price of gold higher."

US President Donald Trump's fluctuating trade policies - imposing and delaying tariffs on Canada and Mexico, while raising duties on Chinese goods - have roiled the global financial markets. In response, China and Canada hit back with tariffs of their own.

Data on Wednesday showed consumer prices cooling more than analysts' expectations, keeping hopes alive that the Fed could cut its interest rate this year.

The Fed last year cut rates by 100 basis points, but has held steady since then. Investors prefer non-yielding gold in a low interest rate environment.

Macquarie raised its gold price forecast to $3,150 per ounce for third quarter and sees single point price high of $3,500 this year.

"We have upgraded our annual silver price forecasts by 2-4 per cent, on account of the metal's precious characteristics, despite downgrading our industrial supply-demand balance," it added.

Investors now await the US Producer Price Index (PPI) data due at 1230 GMT for further insights into the Fed's monetary policy.

Spot silver fell 0.6 per cent to $33.03 an ounce, platinum lost 1.2 per cent to $972.70, while palladium dropped 0.5 per cent to $944.07.