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What’s happening: Gold prices climbed to record highs on Thursday amid weakness in the US dollar.
What happened: Concerns around an escalation in the trade war between the world’s two largest economies – the US and China – had investors flocking to the safe-haven bullion.
Investors also responded to the release of US inflation data on Thursday.
Why it matters: US President Donald Trump had said on Wednesday that he was agreeing to a 90-day pause on several of his new tariffs, effective immediately.
However, China was not included in this relief measure. In fact, the US President raised tariffs on Chinese goods from 104% to 125%, escalating trade war concerns between the world’s two largest economies. China also announced plans to implement 84% tariffs on US goods.
Data released on Thursday showed that consumer prices in the US had unexpectedly declined in March. The annual inflation rate eased for a second month in a row to 2.4% in March, from 2.8% in the previous month and came in lower than market estimates of 2.6%.
Easing inflation should have supported the US dollar. However, uncertainties around the impact of tariffs on the US economy has kept the greenback in check. Weakness in the US dollar lent further to gold prices, as a lower greenback makes metals cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, dipped more than 1% on Thursday.
Investors expect US inflation to accelerate soon due to Trump’s tariff policies. There is still hope that the Federal Reserve would resume lowering interest rates in June in a bid to stimulate the US economy.
Gold futures jumped 3.2% to close at $3,177.5 an ounce on Thursday.
In other metals trading, silver settled higher at $30.759 an ounce, copper surged more than 3% to $4.3365, platinum closed at $933.30 and palladium settled at $899.90.
What to watch: Investors will continue monitoring tariff-related announcements from the US and China.
Data on producer price inflation from the US (1630 UAE Time) will also remain in focus today. Producer prices in the US, which came in unchanged in February following a 0.6% increase in the previous period, are expected to rise by 0.2% in March.
Context: The CAD/USD forex pair moved higher this morning amid weakness in the US dollar index.
Details: A 90-day pause on tariffs by the US President for most countries has eased some pressure on exports from Canada.
On the other hand, concerns over US economic growth due to aggressive trade policies and an escalating trade war with China has reduced the appeal of the greenback.
Weakness in the US dollar lent support to the CAD/USD pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell around 0.7% to 100.16 this morning.
However, lower prices of crude oil, one of Canada’s major exports, weighed on the loonie. WTI crude oil prices declined around 0.6% to trade at $59.69 a barrel this morning.
Data released on Thursday showed the total value of building permits in Canada grew by 2.9% to $13.1 billion in February, compared to a 4.3% decline in the previous month. The figure also came in much better than market estimates of a 0.5% decline.
The CAD/USD forex pair gained around 0.4% to 1.3936 this morning.
What to watch: With no major economic releases due today, investors await data on new motor vehicle sales (1630 UAE Time) and wholesale sales (1630 UAE Time) from Canada on Monday. New motor vehicle sales in Canada, which fell to 121,628 units in January from 135,511 units in December, are expected to decline further to 119,000 units in February. Analysts expect wholesale sales in Canada to rise by 0.4% in February, following a 1.2% gain in January.
Other Markets: European indices closed higher on Thursday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 3.04%, 4.53%, 3.83% and 3.70%, respectively.
Ukraine’s President Volodymyr Zelensky said his government is demanding answers from China after his country’s military forces had captured two Chinese nationals fighting in Russia’s army. The news sent the RUB/USD pair lower in forex trading this morning.
New Zealand’s BusinessNZ Performance of Manufacturing Index fell to 53.2 in March, from 53.9 in the previous month. Despite the slowdown, manufacturing activity remaining in the expansion zone for the third straight month lent support to the NZD/USD forex pair.
Peru’s central bank kept its benchmark interest rate unchanged at 4.75% in April, sending the PEN/USD pair higher in forex trading this morning.
South Africa’s manufacturing production declined by 3.2% year-over-year in February, falling for the fourth month, which exerted pressure on the ZAR/USD forex pair.
Greece’s annual inflation rate fell to 2.4% in March, compared to 2.5% in the previous month. This being the lowest rate in four months sent the EUR/USD pair higher in forex trading this morning.
India’s industrial production (1430 UAE Time), inflation rate (1430 UAE Time), manufacturing production (1430 UAE Time), bank loan growth (1530 UAE Time), deposit growth (1530 UAE Time) and foreign exchange reserves (1530 UAE Time), Brazil’s inflation rate (1600 UAE Time), IBC-BR economic activity (1600 UAE Time) and business confidence (1800 UAE Time), Mexico’s industrial production (1600 UAE Time), Germany’s current account (1645 UAE Time), Russia’s balance of trade (1700 UAE Time), current account (1700 UAE Time) and inflation rate (2000 UAE Time), US Michigan consumer sentiment (1800 UAE Time), Michigan inflation expectations (1800 UAE Time), Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time), as well as Argentina’s inflation rate (2300 UAE Time).
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