HG MARKETS:

Gold extended its rally on Friday, briefly reaching a new all-time high of $3,086.09 before pulling back slightly. The surge is fueled by growing trade tensions and inflation concerns, with traders anticipating the release of the U.S. PCE inflation report later today.

The latest boost in gold prices is largely driven by market worries over President Trump’s upcoming tariffs, which are expected to take effect on April 2. Investors fear that these reciprocal tariffs could increase inflation and destabilize global trade. As a result, gold has risen by 2% for the week, marking its fourth consecutive weekly gain as investors seek safe-haven assets amid uncertainty over U.S. policy.

At 09:21 GMT, gold (XAU/USD) was trading at $3,072.16, up by $15.55, or 0.51%. The broader market is starting to price in the inflationary effects of the tariffs. While some Federal Reserve officials, such as Boston Fed President Susan Collins, anticipate a short-term inflation spike, others, like St. Louis Fed’s Alberto Musalem, warn that inflation could be more persistent. His team estimates that the tariffs could increase inflation by over one percentage point.

The upcoming PCE data, expected to show a 0.4% rise in core inflation for the month, may not fully account for future inflation pressures. This has added momentum to gold’s rally as investors turn to it as an inflation hedge. Core inflation is forecast to rise to 2.7% year-over-year, reinforcing the Fed’s cautious approach and decreasing the likelihood of immediate rate cuts.

Gold typically performs well in times of policy uncertainty and weakening growth expectations. Business investment and hiring have reportedly slowed due to current U.S. policy, and inflation concerns are weighing on consumer sentiment. Richmond Fed’s Thomas Barkin likened the situation to driving with “zero visibility.”

Despite the Fed’s “moderately restrictive” stance, traders see little reason for immediate policy easing, particularly given that February’s data does not reflect more recent developments. This keeps real interest rates and inflation expectations at the forefront of the market’s focus, benefiting gold.

Technically, gold remains in a bullish trend as long as it stays above $3,000, with key support at $2,999.46 and a rising 50-day moving average at $2,902.18. With no significant resistance above $3,086, a move toward $3,100 seems likely, especially if inflation fears persist.