Gold climbed in North American trading on Thursday following the release of a slightly better-than-expected Producer Price Index (PPI). President Donald Trump’s tariff threats have boosted the appeal of gold, currently trading at $2,925, slightly below its record high of $2,942 set on February 11.
President Trump signed the reciprocal tariff order, stating, “Whatever they charge us, we’re going to charge them.” He mentioned that products manufactured or assembled in the U.S. would be exempt from tariffs, and announced upcoming tariffs on automobiles, steel, and aluminum.
Gold prices have benefited from a weakened U.S. dollar. The U.S. Dollar Index (DXY), which compares the dollar against six other currencies, has dropped 0.61% to 107.32.
U.S. Treasury yields are also declining, despite the latest producer inflation report indicating that disinflation has stalled. Positively, the U.S. labor market remains robust, with a decrease in the number of Americans filing for unemployment benefits, as reported by the U.S. Department of Labor.
With uncertainty surrounding U.S. trade policy and potential inflation acceleration, XAU/USD might test higher prices in the short term. Increased demand from central banks, as seen on February 11, could also drive gold prices up.
The World Gold Council (WGC) revealed that central banks have purchased over 1,000 tonnes of gold for the third consecutive year in 2024. Since Trump’s election victory, central bank purchases have surged more than 54% year-over-year to 333 tonnes, according to WGC data.
