Market Overview
Gold (XAU/USD) extended its rally on Friday, hovering near $2,795, after reaching a record high during the Asian session. Investors continue to favor gold as a hedge against economic uncertainty, driven by U.S. President Donald Trump’s renewed tariff threats on Mexico and Canada. The prospect of 25% tariffs on major U.S. trading partners is fueling concerns about inflation and global trade disruptions.
Additionally, expectations that protectionist policies could drive consumer prices higher have reinforced gold’s appeal as an inflation hedge. However, gains have been tempered by the Federal Reserve’s hawkish stance, as it recently paused rate cuts, marking a shift in monetary policy since its easing cycle began in September. The central bank’s cautious tone has led to a modest rise in U.S. Treasury bond yields, supporting the U.S. dollar’s strength, which in turn limits gold’s upside momentum.
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