After Tuesday’s sell-off, the price of gold stabilised on Wednesday (26 February), with Nymex April gold futures contract closed up $5.00 at $2,933.80, while the March silver futures contract up $0.449 to $32.275 per ounce.
According to data released today, US new home sales fell to a three-month low in January. Together with Tuesday’s release of the U.S. consumer confidence index fell sharply, people are more concerned about U.S. economic growth stagnation, with inflation resurgence at the same time, leading to rate cut expectations.
Under a series of weak economic data, U.S. bond market is betting that the Federal Reserve will soon shift from worrying about inflation to worrying about slowing economic growth, pushing the 10-year U.S. bond yields for the sixth consecutive day of decline, which is helping support for the price of gold.
Meanwhile, analysts mostly believe that commodity prices such as lumber and copper are likely to climb as Trump’s global trade policies, including tariffs and an ‘America First’ approach, which has fuelled uncertainty in the markets. Gold has always performed well in an uncertain market environment.
Based on the precious metal’s performance this week, market participants are bracing for the possibility of Trump’s tariff enforcement, which many investors believe could spark a full-blown trade war with major trading partners. And the threat of a spreading trade war that would cut into the global economy and spur inflation is unsettling markets and consumers.
U.S. consumer confidence fell to its lowest in more than three years in February, the Conference Board reported Tuesday.
If Trump continues to impose tariffs on Mexican and Canadian imports next week, while keeping his policy of imposing tariffs on Chinese goods unchanged, the resulting economic uncertainty is likely to continue to push investors towards safe-haven assets that are seen as a reliable store of value, further supporting gold’s recent gains.
