Stock indexes moved higher on Friday after Fed Chair Jerome Powell stated that it remains uncertain whether Trump’s tariffs will drive inflation. Meanwhile, U.S. 10-year Treasury yields also edged up.
### Why Did Stocks Drop Earlier? Markets were initially weaker as the U.S. economy added fewer jobs than expected, raising concerns about slowing growth. This increased expectations that the Federal Reserve may cut interest rates more aggressively.
**Key Factors Driving Gold Prices**
- **Tariffs & Inflation:** The possibility of higher inflation due to tariffs makes gold more attractive as a hedge. - **Federal Reserve Rate Cuts:** Lower interest rates reduce the opportunity cost of holding gold, increasing demand. - **Economic Uncertainty:** If concerns about economic stability persist, investors tend to move into gold as a safe-haven asset.
### Powell’s Comments & Market Reaction Powell spoke after Trump imposed and then delayed 25% tariffs on Mexico and Canada, with implementation still scheduled for April. Other potential tariffs remain on the table.
Market participants now expect multiple rate cuts, with traders pricing in three reductions for 2025. If inflation rises and the Fed continues easing, gold prices could gain further momentum.
### European Market Shift & Its Impact on Gold German bond markets saw the sharpest two-day sell-off since the 1970s due to plans to revise fiscal policies. If European bond volatility remains high, investors may increase their exposure to gold for stability.
With uncertainty in bond markets, expectations of lower U.S. interest rates, and potential inflationary pressures from tariffs, gold remains a key asset to watch in the current environment.
XAUUSD All the legends throwing buys and sells in this chop! Gold hasn’t broken either side yet, but the lower break is coming for sure. Liquidity games at play—patience will pay. Let’s see how next week unfolds.