Gold prices are making strong advances in early trading on Thursday, pushing the precious metal farther above $3,107. Underlying the massive rally is news from today that United States President Donald Trump announced his support. The 90-day pause he declared on the higher tariffs that affect all of China’s industries covers 56 other countries and the European Union.
This sudden turn of events has resulted in a more bullish trading atmosphere for gold. Investors are finally positively responding to the prospect of lowering trade tensions. The European Union will now be subject to a global baseline tax rate of 10% at the very least. This modification is part of a broader effort by the Trump administration to build strong trade relationships.
Demand baselined, but the market was not only quick to respond, but anticipatory. Gold prices spiked as traders looked for safe-haven assets in response to recent geopolitical shift. The gold market seems pleased with the reaction. Analysts are very focused on other economic signals, particularly next week’s US Consumer Price Index (CPI) data.
We expect this CPI report to show turning points in inflation trends, which could set the momentum for the next big gold rally. Under the current policy trajectory, independent predictions have core CPI inflation falling to 3%. This figure doesn’t include food and energy costs and is down from last year. Overall inflation is projected to increase by 2.6% annualized for March. This is a small uptick from the 2.8% rate seen in February. These figures combined are absolutely pivotal as it will form investor sentiment and direction of the gold market in the coming months.
Currency swings have a more profound impact on the broader financial landscape as well. The EUR/USD, for its part, has attracted fresh buying interest, rising back above the 1.1000 level during Thursday’s European session. This increase is based on the good news from the German coalition agreement. The market has responded positively to the suggestion of a pause on tariffs by Trump.
The US Dollar is going on the defensive with today’s CPI data looming ahead. This perfect storm is making for a treacherous and volatile environment for traders. The British Pound, meanwhile, is riding high on the positive risk appetite. Thanks to Trump’s tariff announcement, it’s regained that lost ground against its major counterparts.
According to market analysts, recent developments are very positive for gold investors. They caution that any additional upside will depend on future economic data and progress in US-China trade talks. Investors are treading carefully as they brace themselves for what could be an extreme reaction to these moves.