HG MARKETS:

Gold prices remained steady during Asian trading on Wednesday as investors adopted a cautious stance ahead of an important inflation report. The appeal of gold as a safe-haven asset provided some support, especially amidst the uncertainty surrounding President Donald Trump’s fluctuating tariff policies. Spot gold held firm at $2,911 per ounce, while gold futures for April delivery showed little movement, trading at $2,921 per ounce.

Investors were closely monitoring the upcoming release of the U.S. Consumer Price Index (CPI) data, which is expected to offer crucial insights into the Federal Reserve’s plans regarding interest rates. Typically, lower interest rates reduce the appeal of interest-bearing assets and can drive demand for gold, pushing prices higher. Although there has been speculation about potential rate cuts, Federal Reserve officials have downplayed the likelihood of a near-term reduction. Instead, they have emphasized the importance of staying alert to inflation risks, particularly as the economic landscape remains influenced by trade tensions and tariff policies.

The Federal Reserve is set to meet on March 18-19 to deliberate on interest rates, with market participants keen to understand whether the central bank will make any moves in light of inflation trends.

On the trade front, the Trump administration implemented a 25% tariff on all U.S. imports of steel and aluminum starting Wednesday. This move is expected to heighten global trade tensions, adding further uncertainty to the global economy. The tariffs impact a wide range of products, from industrial components to everyday consumer goods, and have raised concerns about its potential to slow down global economic growth. This fear of an economic downturn has contributed to the increased demand for gold, traditionally viewed as a safe-haven asset in times of financial instability.

In a related development, Trump had briefly proposed a sharp increase in tariffs on Canadian steel and aluminum imports, suggesting a hike to 50%. This escalation was in response to Ontario’s newly implemented trade restrictions. However, after talks between Ontario Premier Doug Ford and U.S. Commerce Secretary Howard Lutnick, a resolution was reached. Ontario agreed to suspend its 25% surcharge on electricity exports to the U.S., prompting the Trump administration to abandon the idea of a 50% tariff increase and retain the existing 25% rate. Despite this, the global trade environment remains tense, keeping gold prices supported. Meanwhile, the U.S. Dollar Index edged 0.2% higher during Asian trading hours, though it remained near a four-month low reached last week, signaling a relatively weaker dollar.