Gold prices maintained their positive momentum during the early European session on Thursday. The precious metal hovered near its all-time peak, originally reached on February 24. Market analysts attribute this trend to the ongoing uncertainty surrounding US President Donald Trump's trade tariffs, which has driven investors toward the safe-haven bullion for the third consecutive day.
The implementation of trade tariffs by the United States has created a ripple effect across global markets, intensifying US-EU trade tensions. This situation has significantly impacted risk sentiment, leading traders to seek refuge in gold as a stable investment option. The US Dollar received some support amid an easing in inflation pressures, lending further stability to the currency in light of these developments.
In Europe, currency pairs have reacted to the evolving economic landscape. The EUR/USD pair has lost ground, trading below 1.0880 in early European trading on Thursday. Similarly, the GBP/USD pair is defensive, hovering near 1.2950. These movements reflect broader market apprehensions about potential economic shifts and trade tensions.
Traders are closely monitoring upcoming economic data releases for guidance. The focus is on the US Producer Price Index (PPI) data, which is expected to provide fresh directional impetus. Additionally, market participants are paying attention to comments from European Central Bank officials, which could further influence market dynamics.
The UK government faces its own set of economic challenges. As it grapples with impending spending cuts and potential tax hikes later this year, there is a pressing need for higher economic growth. A reset in UK-EU economic ties is seen as a potential catalyst for economic improvement, and sweeping changes in these relations appear increasingly likely.