Gold surged to a new all-time high, climbing above $3,357 an ounce, after Federal Reserve Chair Jerome Powell warned that Donald Trump’s tariffs could significantly increase inflation.
Powell stated that the central bank is unlikely to make progress on curbing inflation this year due to the impact of trade policies.
The rally followed a strong performance on Wednesday, when bullion jumped 3.5%—its best single-day gain since March 2023—as the US dollar slumped to a six-month low.
Money markets are now pricing in three interest rate cuts by the Fed before year-end, as traders anticipate a potential slowdown in the US economy.
Speaking at the Economic Club of Chicago, Powell said: “The administration is implementing significant policy changes, in particular trade… and the effects of that are likely to move us away from our goals. So unemployment is likely to go up as the economy slows, and inflation is likely to rise as tariffs find their way into prices paid by the public.”
Michael Brown, an analyst at Pepperstone, described gold as “the only real haven right now,” predicting further gains as demand grows for assets that offer protection from political instability and trade uncertainty. He added that with the 90-day tariff pause continuing and little progress on trade deals, investor appetite for gold is only set to increase.
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