Trade Tensions Ignite Gold Rally-Is This the Start of a New Bull Market?

Image Source: Ahead of the Herd

Gold prices rallied on Thursday as buyers poured into the safe-haven metal following the US Federal Reserve's warning about increasing economic uncertainty with inflation and labor market risks muddying the outlook. Demand was also driven higher by expectations this weekend's high-stakes US-China trade talks will reset global economic sentiment.

Key Highlights:

Spot gold rose 0.6% to $3,384.99 an ounce, and US gold futures were unchanged at $3,392.00, as the Fed left interest rates steady but sounded a warning on increased inflation and unemployment threats, signaling a dimly lit economic road ahead.
Fed Chairman Jerome Powell underscored the uncertainty, saying it's not certain if the US economy will continue its growth or crumble under accumulating pressures, such as the effects of President Trump's tariffs.
The refusal of gold to yield is particularly alluring in this setting, as investors bet on protection against both financial and geopolitical strife.
Markets are also keeping close tabs on the impending US-China trade talks, with analysts noting that Trump's hawkish approach and threat of additional tariffs are dampening risk appetite and buoying gold demand.

Other valuable metals experienced mixed action: silver was unchanged at $32.46 an ounce, platinum increased 0.5% to $978.56, and palladium fell 0.7% to $965.78.

Gold is expected to continue being resilient if the Fed gives hints of rate cuts later in the year or if global trade tensions intensify further.

As the Fed's caution and uncertainty in global trade take center stage, gold's safe-haven demand is burning brighter than ever.

Sources: Economic Times, Reuters, FXStreet